Correlation Between Lockheed Martin and FEMALE HEALTH

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

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

Diversification Opportunities for Lockheed Martin and FEMALE HEALTH

0.51

Correlation Coefficient

Lockheed Martin  FEMALE HEALTH

Very weak diversification

The 3 months correlation between Lockheed and FEMALE is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH 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 FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between Lockheed Martin and FEMALE HEALTH

Assuming the 90 days trading horizon Lockheed Martin is expected to generate 0.2 times more return on investment than FEMALE HEALTH. However, Lockheed Martin is 4.98 times less risky than FEMALE HEALTH. It trades about 0.02 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about -0.04 per unit of risk. If you would invest  43,488  in Lockheed Martin on September 23, 2024 and sell it today you would earn a total of  2,822  from holding Lockheed Martin or generate 6.49% return on investment over 90 days.

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

Lockheed Martin  vs.  FEMALE HEALTH

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 latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FEMALE HEALTH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FEMALE HEALTH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lockheed Martin and FEMALE HEALTH

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

The idea behind Lockheed Martin and FEMALE HEALTH 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.