Correlation Between SP Global and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both SP Global 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 SP Global and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global and Lockheed Martin, you can compare the effects of market volatilities on SP Global 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 SP Global with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and Lockheed Martin.
Diversification Opportunities for SP Global and Lockheed Martin
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPGI and Lockheed is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and SP Global 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 SP Global 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 SP Global i.e., SP Global and Lockheed Martin go up and down completely randomly.
Pair Corralation between SP Global and Lockheed Martin
Given the investment horizon of 90 days SP Global is expected to under-perform the Lockheed Martin. In addition to that, SP Global is 1.32 times more volatile than Lockheed Martin. It trades about -0.09 of its total potential returns per unit of risk. Lockheed Martin is currently generating about 0.15 per unit of volatility. If you would invest 45,238 in Lockheed Martin on February 7, 2024 and sell it today you would earn a total of 1,040 from holding Lockheed Martin or generate 2.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
SP Global vs. Lockheed Martin
Performance |
Timeline |
SP Global |
Lockheed Martin |
SP Global and Lockheed Martin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SP Global and Lockheed Martin
The main advantage of trading using opposite SP Global and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global 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.SP Global vs. MSCI Inc | SP Global vs. Nasdaq Inc | SP Global vs. Intercontinental Exchange | SP Global vs. CME Group |
Lockheed Martin vs. Novocure | Lockheed Martin vs. HubSpot | Lockheed Martin vs. DigitalOcean Holdings | Lockheed Martin vs. Appian Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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