Correlation Between MTY Food and Lockheed Martin

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

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

Diversification Opportunities for MTY Food and Lockheed Martin

-0.42

Correlation Coefficient

MTY Food  Lockheed Martin

Very good diversification

The 3 months correlation between MTY and Lockheed is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and MTY Food 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 MTY Food Group 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 MTY Food i.e., MTY Food and Lockheed Martin go up and down completely randomly.

Pair Corralation between MTY Food and Lockheed Martin

Assuming the 90 days horizon MTY Food Group is expected to generate 1.22 times more return on investment than Lockheed Martin. However, MTY Food is 1.22 times more volatile than Lockheed Martin. It trades about -0.21 of its potential returns per unit of risk. Lockheed Martin is currently generating about -0.38 per unit of risk. If you would invest  3,245  in MTY Food Group on October 10, 2024 and sell it today you would lose (165.00) from holding MTY Food Group or give up 5.08% of portfolio value over 90 days.

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

MTY Food Group  vs.  Lockheed Martin

MTY Food Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTY Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 fragile performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MTY Food and Lockheed Martin

The main advantage of trading using opposite MTY Food and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTY Food 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 MTY Food Group 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 Stocks Directory module to find actively traded stocks across global markets.