Correlation Between Goldman Sachs and Lockheed Martin

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

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

Diversification Opportunities for Goldman Sachs and Lockheed Martin

-0.47

Correlation Coefficient

Goldman Sachs  Lockheed Martin

Very good diversification

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

Pair Corralation between Goldman Sachs and Lockheed Martin

Assuming the 90 days horizon The Goldman Sachs is expected to generate 0.88 times more return on investment than Lockheed Martin. However, The Goldman Sachs is 1.14 times less risky than Lockheed Martin. It trades about 0.41 of its potential returns per unit of risk. Lockheed Martin is currently generating about 0.01 per unit of risk. If you would invest  1,131,806  in The Goldman Sachs on October 20, 2024 and sell it today you would earn a total of  161,694  from holding The Goldman Sachs or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

The Goldman Sachs  vs.  Lockheed Martin

Goldman Sachs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Goldman Sachs showed solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Goldman Sachs and Lockheed Martin

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