Correlation Between Astronics and Lockheed Martin

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Can any of the company-specific risk be diversified away by investing in both Astronics 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 Astronics and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astronics Cp and Lockheed Martin Corp, you can compare the effects of market volatilities on Astronics 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 Astronics with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astronics and Lockheed Martin.

Diversification Opportunities for Astronics and Lockheed Martin

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Astronics and Lockheed is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Astronics Cp and Lockheed Martin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin Corp and Astronics 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 Astronics Cp 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 Corp has no effect on the direction of Astronics i.e., Astronics and Lockheed Martin go up and down completely randomly.

Pair Corralation between Astronics and Lockheed Martin

Given the investment horizon of 90 days Astronics Cp is expected to generate 2.08 times more return on investment than Lockheed Martin. However, Astronics is 2.08 times more volatile than Lockheed Martin Corp. It trades about 0.38 of its potential returns per unit of risk. Lockheed Martin Corp is currently generating about 0.68 per unit of risk. If you would invest  1,049  in Astronics Cp on May 19, 2022 and sell it today you would earn a total of  174.00  from holding Astronics Cp or generate 16.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Astronics Cp  vs.  Lockheed Martin Corp

 Performance (%) 
       Timeline  
Astronics Cp 
Astronics Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Astronics Cp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Astronics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Astronics Price Channel

Lockheed Martin Corp 
Lockheed Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Lockheed Martin Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Lockheed Martin is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Lockheed Price Channel

Astronics and Lockheed Martin Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Astronics and Lockheed Martin

The main advantage of trading using opposite Astronics and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astronics 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 Astronics Cp and Lockheed Martin 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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