Correlation Between Lockheed Martin and Airbus SE
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Airbus SE 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 Airbus SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Airbus SE, you can compare the effects of market volatilities on Lockheed Martin and Airbus SE 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 Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Airbus SE.
Diversification Opportunities for Lockheed Martin and Airbus SE
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Airbus is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE 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 Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Airbus SE go up and down completely randomly.
Pair Corralation between Lockheed Martin and Airbus SE
Assuming the 90 days horizon Lockheed Martin is expected to generate 0.83 times more return on investment than Airbus SE. However, Lockheed Martin is 1.2 times less risky than Airbus SE. It trades about 0.07 of its potential returns per unit of risk. Airbus SE is currently generating about 0.03 per unit of risk. If you would invest 40,522 in Lockheed Martin on September 3, 2024 and sell it today you would earn a total of 9,038 from holding Lockheed Martin or generate 22.3% 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. Airbus SE
Performance |
| Timeline |
| Lockheed Martin |
| Airbus SE |
Lockheed Martin and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Airbus SE
The main advantage of trading using opposite Lockheed Martin and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Airbus SE 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 Airbus SE will offset losses from the drop in Airbus SE's long position.| Lockheed Martin vs. Evolution Mining Limited | Lockheed Martin vs. Perseus Mining Limited | Lockheed Martin vs. Insteel Industries | Lockheed Martin vs. MCEWEN MINING INC |
| Airbus SE vs. GAMESTOP | Airbus SE vs. AWILCO DRILLING PLC | Airbus SE vs. Hochschild Mining plc | Airbus SE vs. Penn National Gaming |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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