Correlation Between Lockheed Martin and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Fevertree Drinks PLC, you can compare the effects of market volatilities on Lockheed Martin and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Fevertree Drinks.
Diversification Opportunities for Lockheed Martin and Fevertree Drinks
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lockheed and Fevertree is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Lockheed Martin and Fevertree Drinks
Assuming the 90 days horizon Lockheed Martin is expected to generate 0.91 times more return on investment than Fevertree Drinks. However, Lockheed Martin is 1.09 times less risky than Fevertree Drinks. It trades about -0.33 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.46 per unit of risk. If you would invest 48,330 in Lockheed Martin on October 9, 2024 and sell it today you would lose (3,345) from holding Lockheed Martin or give up 6.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Fevertree Drinks PLC
Performance |
| Timeline |
| Lockheed Martin |
| Fevertree Drinks PLC |
Lockheed Martin and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Fevertree Drinks
The main advantage of trading using opposite Lockheed Martin and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Lockheed Martin vs. Microbot Medical | Lockheed Martin vs. SPECTRAL MEDICAL | Lockheed Martin vs. GLOBUS MEDICAL A | Lockheed Martin vs. Molina Healthcare |
| Fevertree Drinks vs. Gruppo Mutuionline SpA | Fevertree Drinks vs. YATRA ONLINE DL 0001 | Fevertree Drinks vs. Cardinal Health | Fevertree Drinks vs. GungHo Online Entertainment |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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