Correlation Between T Mobile and Lockheed Martin

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

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

Diversification Opportunities for T Mobile and Lockheed Martin

0.15

Correlation Coefficient

T Mobile  Lockheed Martin

Average diversification

The 3 months correlation between T1MU34 and Lockheed is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding T Mobile and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and T Mobile 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 T Mobile 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 T Mobile i.e., T Mobile and Lockheed Martin go up and down completely randomly.

Pair Corralation between T Mobile and Lockheed Martin

Assuming the 90 days trading horizon T Mobile is expected to under-perform the Lockheed Martin. In addition to that, T Mobile is 1.08 times more volatile than Lockheed Martin. It trades about -0.13 of its total potential returns per unit of risk. Lockheed Martin is currently generating about 0.0 per unit of volatility. If you would invest  300,298  in Lockheed Martin on October 23, 2024 and sell it today you would lose (171.00) from holding Lockheed Martin or give up 0.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

T Mobile  vs.  Lockheed Martin

T Mobile

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, T Mobile may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with T Mobile and Lockheed Martin

The main advantage of trading using opposite T Mobile and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Mobile 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 T Mobile 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.