Correlation Between SPDR Series and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both SPDR Series 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 SPDR Series and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Series Trust and Lockheed Martin, you can compare the effects of market volatilities on SPDR Series 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 SPDR Series with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Series and Lockheed Martin.
Diversification Opportunities for SPDR Series and Lockheed Martin
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPDR and Lockheed is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and SPDR Series 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 SPDR Series Trust 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 SPDR Series i.e., SPDR Series and Lockheed Martin go up and down completely randomly.
Pair Corralation between SPDR Series and Lockheed Martin
Assuming the 90 days trading horizon SPDR Series is expected to generate 2.02 times less return on investment than Lockheed Martin. But when comparing it to its historical volatility, SPDR Series Trust is 1.16 times less risky than Lockheed Martin. It trades about 0.09 of its potential returns per unit of risk. Lockheed Martin is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 778,936 in Lockheed Martin on August 30, 2024 and sell it today you would earn a total of 307,864 from holding Lockheed Martin or generate 39.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Series Trust vs. Lockheed Martin
Performance |
| Timeline |
| SPDR Series Trust |
| Lockheed Martin |
SPDR Series and Lockheed Martin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Series and Lockheed Martin
The main advantage of trading using opposite SPDR Series and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Series 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.| SPDR Series vs. SPDR Dow Jones | SPDR Series vs. SPDR Gold Trust | SPDR Series vs. SPDR SP 500 | SPDR Series vs. SPDR SP Regional |
| Lockheed Martin vs. DXC Technology | Lockheed Martin vs. GMxico Transportes SAB | Lockheed Martin vs. Genworth Financial | Lockheed Martin vs. First Republic Bank |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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