Correlation Between Lockheed Martin and National Beverage

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

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

Diversification Opportunities for Lockheed Martin and National Beverage

-0.37

Correlation Coefficient

Lockheed Martin  National Beverage

Very good diversification

The 3 months correlation between Lockheed and National is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and National Beverage go up and down completely randomly.

Pair Corralation between Lockheed Martin and National Beverage

Assuming the 90 days trading horizon Lockheed Martin is expected to generate 0.86 times more return on investment than National Beverage. However, Lockheed Martin is 1.16 times less risky than National Beverage. It trades about 0.05 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.05 per unit of risk. If you would invest  41,763  in Lockheed Martin on October 10, 2024 and sell it today you would earn a total of  3,257  from holding Lockheed Martin or generate 7.8% return on investment over 90 days.

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

Lockheed Martin  vs.  National Beverage Corp

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.

National Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Lockheed Martin and National Beverage

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

The idea behind Lockheed Martin and National Beverage Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.