Correlation Between Lockheed Martin and Tata Global

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

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

Diversification Opportunities for Lockheed Martin and Tata Global

0.31

Correlation Coefficient

Lockheed Martin  Tata Global

Weak diversification

The 3 months correlation between Lockheed and Tata is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Tata Global Beverages in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Global Beverages 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 Tata Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Global Beverages has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Tata Global go up and down completely randomly.

Pair Corralation between Lockheed Martin and Tata Global

If you would invest  44,599  in Lockheed Martin on January 26, 2024 and sell it today you would earn a total of  1,315  from holding Lockheed Martin or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Lockheed Martin  vs.  Tata Global Beverages

Lockheed Martin

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lockheed Martin are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady primary indicators, Lockheed Martin may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Tata Global Beverages

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tata Global Beverages has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tata Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lockheed Martin and Tata Global

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

The idea behind Lockheed Martin and Tata Global Beverages 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 Commodity Directory module to find actively traded commodities issued by global exchanges.