Correlation Between TITAN MACHINERY and Lockheed Martin

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

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

Diversification Opportunities for TITAN MACHINERY and Lockheed Martin

-0.47

Correlation Coefficient

TITAN MACHINERY  Lockheed Martin

Very good diversification

The 3 months correlation between TITAN and Lockheed is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and TITAN MACHINERY 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 TITAN MACHINERY 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 TITAN MACHINERY i.e., TITAN MACHINERY and Lockheed Martin go up and down completely randomly.

Pair Corralation between TITAN MACHINERY and Lockheed Martin

Assuming the 90 days trading horizon TITAN MACHINERY is expected to under-perform the Lockheed Martin. In addition to that, TITAN MACHINERY is 2.66 times more volatile than Lockheed Martin. It trades about -0.05 of its total potential returns per unit of risk. Lockheed Martin is currently generating about 0.02 per unit of volatility. If you would invest  43,488  in Lockheed Martin on September 23, 2024 and sell it today you would earn a total of  2,822  from holding Lockheed Martin or generate 6.49% return on investment over 90 days.

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

TITAN MACHINERY  vs.  Lockheed Martin

TITAN MACHINERY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TITAN MACHINERY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, TITAN MACHINERY is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TITAN MACHINERY and Lockheed Martin

The main advantage of trading using opposite TITAN MACHINERY and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TITAN MACHINERY 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.

The idea behind TITAN MACHINERY and Lockheed Martin 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.