Correlation Between Lockheed Martin and Genmab AS

Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Genmab AS 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 Martin and Genmab AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lockheed Martin and Genmab AS, you can compare the effects of market volatilities on Lockheed Martin and Genmab AS 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 Martin with a short position of Genmab AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Genmab AS.

Diversification Opportunities for Lockheed Martin and Genmab AS

0.65

Correlation Coefficient

Lockheed Martin  Genmab AS

Poor diversification

The 3 months correlation between Lockheed and Genmab is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Genmab AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genmab AS and Lockheed Martin 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 are associated (or correlated) with Genmab AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genmab AS has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Genmab AS go up and down completely randomly.

Pair Corralation between Lockheed Martin and Genmab AS

Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.53 times more return on investment than Genmab AS. However, Lockheed Martin is 1.9 times less risky than Genmab AS. It trades about 0.21 of its potential returns per unit of risk. Genmab AS is currently generating about -0.02 per unit of risk. If you would invest  44,041  in Lockheed Martin on January 20, 2024 and sell it today you would earn a total of  1,568  from holding Lockheed Martin or generate 3.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

Lockheed Martin  vs.  Genmab AS

Lockheed Martin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lockheed Martin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Lockheed Martin is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Genmab AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Genmab AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Genmab AS is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lockheed Martin and Genmab AS

The main advantage of trading using opposite Lockheed Martin and Genmab AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Genmab AS 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 Genmab AS will offset losses from the drop in Genmab AS's long position.

The idea behind Lockheed Martin and Genmab AS 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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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.