Correlation Between Lockheed Martin and Haier Smart
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Haier Smart 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 Haier Smart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Haier Smart Home, you can compare the effects of market volatilities on Lockheed Martin and Haier Smart 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 Haier Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Haier Smart.
Diversification Opportunities for Lockheed Martin and Haier Smart
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lockheed and Haier is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Haier Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haier Smart Home 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 Haier Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haier Smart Home has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Haier Smart go up and down completely randomly.
Pair Corralation between Lockheed Martin and Haier Smart
Assuming the 90 days horizon Lockheed Martin is expected to under-perform the Haier Smart. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.33 times less risky than Haier Smart. The stock trades about -0.24 of its potential returns per unit of risk. The Haier Smart Home is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Haier Smart Home on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Haier Smart Home or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Haier Smart Home
Performance |
| Timeline |
| Lockheed Martin |
| Haier Smart Home |
Lockheed Martin and Haier Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Haier Smart
The main advantage of trading using opposite Lockheed Martin and Haier Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Haier Smart 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 Haier Smart will offset losses from the drop in Haier Smart's long position.| Lockheed Martin vs. ECHO INVESTMENT ZY | Lockheed Martin vs. EAT WELL INVESTMENT | Lockheed Martin vs. MGIC INVESTMENT | Lockheed Martin vs. WisdomTree Investments |
| Haier Smart vs. GEAR4MUSIC LS 10 | Haier Smart vs. Grupo Carso SAB | Haier Smart vs. CVR Medical Corp | Haier Smart vs. Cars Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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