Correlation Between Rolls-Royce Holdings and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Rolls-Royce Holdings 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 Rolls-Royce Holdings and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rolls Royce Holdings plc and Lockheed Martin, you can compare the effects of market volatilities on Rolls-Royce Holdings 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 Rolls-Royce Holdings with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rolls-Royce Holdings and Lockheed Martin.
Diversification Opportunities for Rolls-Royce Holdings and Lockheed Martin
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rolls-Royce and Lockheed is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rolls Royce Holdings plc and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Rolls-Royce Holdings 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 Rolls Royce Holdings plc 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 Rolls-Royce Holdings i.e., Rolls-Royce Holdings and Lockheed Martin go up and down completely randomly.
Pair Corralation between Rolls-Royce Holdings and Lockheed Martin
If you would invest 689.00 in Rolls Royce Holdings plc on November 30, 2024 and sell it today you would earn a total of 211.00 from holding Rolls Royce Holdings plc or generate 30.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Rolls Royce Holdings plc vs. Lockheed Martin
Performance |
| Timeline |
| Rolls Royce Holdings |
| Lockheed Martin |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Rolls-Royce Holdings and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rolls-Royce Holdings and Lockheed Martin
The main advantage of trading using opposite Rolls-Royce Holdings and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rolls-Royce Holdings 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.| Rolls-Royce Holdings vs. SCIENCE IN SPORT | Rolls-Royce Holdings vs. DICKS Sporting Goods | Rolls-Royce Holdings vs. British American Tobacco | Rolls-Royce Holdings vs. Air Transport Services |
| Lockheed Martin vs. Scientific Games | Lockheed Martin vs. Yuexiu Transport Infrastructure | Lockheed Martin vs. Sportsmans Warehouse Holdings | Lockheed Martin vs. Games Workshop Group |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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