Correlation Between Lockheed Martin and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and ECHO INVESTMENT 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 ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on Lockheed Martin and ECHO INVESTMENT 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 ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and ECHO INVESTMENT.
Diversification Opportunities for Lockheed Martin and ECHO INVESTMENT
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and ECHO is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY 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 ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between Lockheed Martin and ECHO INVESTMENT
Assuming the 90 days horizon Lockheed Martin is expected to under-perform the ECHO INVESTMENT. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.2 times less risky than ECHO INVESTMENT. The stock trades about -0.29 of its potential returns per unit of risk. The ECHO INVESTMENT ZY is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 102.00 in ECHO INVESTMENT ZY on September 13, 2024 and sell it today you would earn a total of 6.00 from holding ECHO INVESTMENT ZY or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lockheed Martin vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| Lockheed Martin |
| ECHO INVESTMENT ZY |
Lockheed Martin and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and ECHO INVESTMENT
The main advantage of trading using opposite Lockheed Martin and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| Lockheed Martin vs. Airbus SE | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. Superior Plus Corp | Lockheed Martin vs. Origin Agritech |
| ECHO INVESTMENT vs. OPEN HOUSE GROUP | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. SIVERS SEMICONDUCTORS AB | ECHO INVESTMENT vs. CHINA HUARONG ENERHD 50 |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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