Correlation Between Lockheed Martin and Sysco

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

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

Diversification Opportunities for Lockheed Martin and Sysco

-0.63

Correlation Coefficient

Lockheed Martin  Sysco

Excellent diversification

The 3 months correlation between Lockheed and Sysco is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco 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 Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Sysco go up and down completely randomly.

Pair Corralation between Lockheed Martin and Sysco

Considering the 90-day investment horizon Lockheed Martin is expected to generate 0.61 times more return on investment than Sysco. However, Lockheed Martin is 1.64 times less risky than Sysco. It trades about 0.11 of its potential returns per unit of risk. Sysco is currently generating about -0.05 per unit of risk. If you would invest  45,404  in Lockheed Martin on February 4, 2024 and sell it today you would earn a total of  787.00  from holding Lockheed Martin or generate 1.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Lockheed Martin  vs.  Sysco

Lockheed Martin

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lockheed Martin are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Lockheed Martin may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Sysco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lockheed Martin and Sysco

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

The idea behind Lockheed Martin and Sysco 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.