Correlation Between Lockheed Martin and Patria Investments

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

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

Diversification Opportunities for Lockheed Martin and Patria Investments

-0.66

Correlation Coefficient

Lockheed Martin  Patria Investments

Excellent diversification

The 3 months correlation between Lockheed and Patria is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Patria Investments Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments 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 Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Patria Investments go up and down completely randomly.

Pair Corralation between Lockheed Martin and Patria Investments

Assuming the 90 days trading horizon Lockheed Martin is expected to generate 1.41 times more return on investment than Patria Investments. However, Lockheed Martin is 1.41 times more volatile than Patria Investments Limited. It trades about 0.04 of its potential returns per unit of risk. Patria Investments Limited is currently generating about 0.01 per unit of risk. If you would invest  221,351  in Lockheed Martin on October 10, 2024 and sell it today you would earn a total of  61,284  from holding Lockheed Martin or generate 27.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.21%
Values	Daily Returns

Lockheed Martin  vs.  Patria Investments Limited

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. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat 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.

Patria Investments

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments Limited are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Patria Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lockheed Martin and Patria Investments

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

The idea behind Lockheed Martin and Patria Investments Limited 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.