Correlation Between Lockheed Martin and Pfizer
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Pfizer 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 Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Pfizer Inc, you can compare the effects of market volatilities on Lockheed Martin and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Pfizer.
Diversification Opportunities for Lockheed Martin and Pfizer
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lockheed and Pfizer is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Pfizer go up and down completely randomly.
Pair Corralation between Lockheed Martin and Pfizer
Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.5 times more return on investment than Pfizer. However, Lockheed Martin is 1.99 times less risky than Pfizer. It trades about 0.24 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.08 per unit of risk. If you would invest 42,798 in Lockheed Martin on January 24, 2024 and sell it today you would earn a total of 3,210 from holding Lockheed Martin or generate 7.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Lockheed Martin vs. Pfizer Inc
Performance |
Timeline |
Lockheed Martin |
Pfizer Inc |
Lockheed Martin and Pfizer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lockheed Martin and Pfizer
The main advantage of trading using opposite Lockheed Martin and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.Lockheed Martin vs. Novocure | Lockheed Martin vs. HubSpot | Lockheed Martin vs. DigitalOcean Holdings | Lockheed Martin vs. Appian Corp |
Pfizer vs. Silver Spike Investment | Pfizer vs. Alkermes Plc | Pfizer vs. Eagle Pharmaceuticals | Pfizer vs. Evotec SE ADR |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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