Correlation Between Lockheed Martin and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Vanguard Total at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lockheed Martin and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Vanguard Total Bond, you can compare the effects of market volatilities on Lockheed Martin and Vanguard Total and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lockheed Martin with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Vanguard Total.
Diversification Opportunities for Lockheed Martin and Vanguard Total
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and Vanguard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond and Lockheed Martin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lockheed Martin are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Vanguard Total go up and down completely randomly.
Pair Corralation between Lockheed Martin and Vanguard Total
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Vanguard Total. In addition to that, Lockheed Martin is 4.35 times more volatile than Vanguard Total Bond. It trades about -0.2 of its total potential returns per unit of risk. Vanguard Total Bond is currently generating about -0.04 per unit of volatility. If you would invest 945.00 in Vanguard Total Bond on August 27, 2024 and sell it today you would lose (3.00) from holding Vanguard Total Bond or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Vanguard Total Bond
Performance |
| Timeline |
| Lockheed Martin |
| Vanguard Total Bond |
Lockheed Martin and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Vanguard Total
The main advantage of trading using opposite Lockheed Martin and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Vanguard Total can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Vanguard Total will offset losses from the drop in Vanguard Total's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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