Correlation Between VSE and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both VSE 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 VSE and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VSE Corporation and Lockheed Martin, you can compare the effects of market volatilities on VSE 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 VSE with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of VSE and Lockheed Martin.
Diversification Opportunities for VSE and Lockheed Martin
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VSE and Lockheed is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding VSE Corp. and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and VSE 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 VSE Corporation 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 VSE i.e., VSE and Lockheed Martin go up and down completely randomly.
Pair Corralation between VSE and Lockheed Martin
Given the investment horizon of 90 days VSE Corporation is expected to generate 2.32 times more return on investment than Lockheed Martin. However, VSE is 2.32 times more volatile than Lockheed Martin. It trades about 0.23 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.14 per unit of risk. If you would invest 10,282 in VSE Corporation on August 26, 2024 and sell it today you would earn a total of 1,416 from holding VSE Corporation or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VSE Corp. vs. Lockheed Martin
Performance |
| Timeline |
| VSE Corporation |
| Lockheed Martin |
VSE and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VSE and Lockheed Martin
The main advantage of trading using opposite VSE and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE 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.| VSE vs. Park Electrochemical | VSE vs. Innovative Solutions and | VSE vs. Curtiss Wright | VSE vs. National Presto Industries |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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