Correlation Between Lockheed Martin and SOGECLAIR
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and SOGECLAIR 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 SOGECLAIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and SOGECLAIR SA INH, you can compare the effects of market volatilities on Lockheed Martin and SOGECLAIR 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 SOGECLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and SOGECLAIR.
Diversification Opportunities for Lockheed Martin and SOGECLAIR
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and SOGECLAIR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH 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 SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and SOGECLAIR go up and down completely randomly.
Pair Corralation between Lockheed Martin and SOGECLAIR
Assuming the 90 days horizon Lockheed Martin is expected to generate 0.64 times more return on investment than SOGECLAIR. However, Lockheed Martin is 1.57 times less risky than SOGECLAIR. It trades about 0.02 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.01 per unit of risk. If you would invest 43,825 in Lockheed Martin on September 24, 2024 and sell it today you would earn a total of 2,730 from holding Lockheed Martin or generate 6.23% 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. SOGECLAIR SA INH
Performance |
| Timeline |
| Lockheed Martin |
| SOGECLAIR SA INH |
Lockheed Martin and SOGECLAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and SOGECLAIR
The main advantage of trading using opposite Lockheed Martin and SOGECLAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, SOGECLAIR 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 SOGECLAIR will offset losses from the drop in SOGECLAIR's long position.| Lockheed Martin vs. Raytheon Technologies Corp | Lockheed Martin vs. The Boeing | Lockheed Martin vs. The Boeing | Lockheed Martin vs. Lockheed Martin |
| SOGECLAIR vs. Raytheon Technologies Corp | SOGECLAIR vs. The Boeing | SOGECLAIR vs. Lockheed Martin | SOGECLAIR 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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