Correlation Between Lockheed Martin and WesBanco
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and WesBanco 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 WesBanco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and WesBanco, you can compare the effects of market volatilities on Lockheed Martin and WesBanco 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 WesBanco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and WesBanco.
Diversification Opportunities for Lockheed Martin and WesBanco
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and WesBanco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and WesBanco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WesBanco 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 WesBanco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WesBanco has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and WesBanco go up and down completely randomly.
Pair Corralation between Lockheed Martin and WesBanco
Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the WesBanco. In addition to that, Lockheed Martin is 3.96 times more volatile than WesBanco. It trades about -0.2 of its total potential returns per unit of risk. WesBanco is currently generating about 0.14 per unit of volatility. If you would invest 2,484 in WesBanco on August 27, 2024 and sell it today you would earn a total of 26.00 from holding WesBanco or generate 1.05% 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. WesBanco
Performance |
| Timeline |
| Lockheed Martin |
| WesBanco |
Lockheed Martin and WesBanco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and WesBanco
The main advantage of trading using opposite Lockheed Martin and WesBanco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, WesBanco 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 WesBanco will offset losses from the drop in WesBanco's long position.| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin vs. The Boeing |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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