Correlation Between LOCKHEED and Live Ventures

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Can any of the company-specific risk be diversified away by investing in both LOCKHEED and Live Ventures 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 and Live Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOCKHEED MARTIN P and Live Ventures, you can compare the effects of market volatilities on LOCKHEED and Live Ventures 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 with a short position of Live Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOCKHEED and Live Ventures.

Diversification Opportunities for LOCKHEED and Live Ventures

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between LOCKHEED and Live is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LOCKHEED MARTIN P and Live Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Ventures and LOCKHEED 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 P are associated (or correlated) with Live Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Ventures has no effect on the direction of LOCKHEED i.e., LOCKHEED and Live Ventures go up and down completely randomly.

Pair Corralation between LOCKHEED and Live Ventures

Assuming the 90 days trading horizon LOCKHEED MARTIN P is expected to generate 16.74 times more return on investment than Live Ventures. However, LOCKHEED is 16.74 times more volatile than Live Ventures. It trades about 0.05 of its potential returns per unit of risk. Live Ventures is currently generating about -0.06 per unit of risk. If you would invest  8,828  in LOCKHEED MARTIN P on August 27, 2024 and sell it today you would lose (91.00) from holding LOCKHEED MARTIN P or give up 1.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.71%
ValuesDaily Returns

LOCKHEED MARTIN P  vs.  Live Ventures

 Performance 
       Timeline  
LOCKHEED MARTIN P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days LOCKHEED MARTIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LOCKHEED is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Live Ventures 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

LOCKHEED and Live Ventures Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LOCKHEED and Live Ventures

The main advantage of trading using opposite LOCKHEED and Live Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOCKHEED position performs unexpectedly, Live Ventures 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 Live Ventures will offset losses from the drop in Live Ventures' long position.
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The idea behind LOCKHEED MARTIN P and Live Ventures pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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