Correlation Between Lockheed Martin and GREENX METALS

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

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

Diversification Opportunities for Lockheed Martin and GREENX METALS

0.34

Correlation Coefficient

Lockheed Martin  GREENX METALS

Weak diversification

The 3 months correlation between Lockheed and GREENX is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD 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 GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and GREENX METALS go up and down completely randomly.

Pair Corralation between Lockheed Martin and GREENX METALS

Assuming the 90 days trading horizon Lockheed Martin is expected to generate 1.01 times less return on investment than GREENX METALS. But when comparing it to its historical volatility, Lockheed Martin is 2.0 times less risky than GREENX METALS. It trades about 0.13 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  40.00  in GREENX METALS LTD on October 20, 2024 and sell it today you would earn a total of  1.00  from holding GREENX METALS LTD or generate 2.5% return on investment over 90 days.

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

Lockheed Martin  vs.  GREENX METALS LTD

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.

GREENX METALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENX METALS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lockheed Martin and GREENX METALS

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

The idea behind Lockheed Martin and GREENX METALS LTD 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..