Correlation Between NYSE Composite and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Lockheed Martin 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 NYSE Composite and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Lockheed Martin, you can compare the effects of market volatilities on NYSE Composite and Lockheed Martin 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 NYSE Composite with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Lockheed Martin.
Diversification Opportunities for NYSE Composite and Lockheed Martin
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Lockheed is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and NYSE Composite 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 NYSE Composite are associated (or correlated) with Lockheed Martin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lockheed Martin has no effect on the direction of NYSE Composite i.e., NYSE Composite and Lockheed Martin go up and down completely randomly.
Pair Corralation between NYSE Composite and Lockheed Martin
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.38 times more return on investment than Lockheed Martin. However, NYSE Composite is 2.63 times less risky than Lockheed Martin. It trades about 0.14 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.15 per unit of risk. If you would invest 1,951,644 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 69,338 from holding NYSE Composite or generate 3.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Lockheed Martin
Performance |
| Timeline |
NYSE Composite and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Lockheed Martin
Pair trading matchups for Lockheed Martin
Pair Trading with NYSE Composite and Lockheed Martin
The main advantage of trading using opposite NYSE Composite and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Lockheed Martin 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 Lockheed Martin will offset losses from the drop in Lockheed Martin's long position.| NYSE Composite vs. Delek Drilling | NYSE Composite vs. Helmerich and Payne | NYSE Composite vs. Waste Management | NYSE Composite vs. US Global Investors |
| Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. General Dynamics | Lockheed Martin vs. L3Harris Technologies | Lockheed Martin 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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