Correlation Between Lockheed Martin and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Whirlpool 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 Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Whirlpool, you can compare the effects of market volatilities on Lockheed Martin and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Whirlpool.
Diversification Opportunities for Lockheed Martin and Whirlpool
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Whirlpool is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Whirlpool go up and down completely randomly.
Pair Corralation between Lockheed Martin and Whirlpool
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Whirlpool. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.09 times less risky than Whirlpool. The stock trades about -0.09 of its potential returns per unit of risk. The Whirlpool is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 10,212 in Whirlpool on August 27, 2024 and sell it today you would earn a total of 1,040 from holding Whirlpool or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Whirlpool
Performance |
| Timeline |
| Lockheed Martin |
| Whirlpool |
Lockheed Martin and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Whirlpool
The main advantage of trading using opposite Lockheed Martin and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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