Correlation Between National Retail and Lockheed Martin

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

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

Diversification Opportunities for National Retail and Lockheed Martin

-0.09

Correlation Coefficient

National Retail  Lockheed Martin

Good diversification

The 3 months correlation between National and Lockheed is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and National Retail 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 National Retail Properties 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 National Retail i.e., National Retail and Lockheed Martin go up and down completely randomly.

Pair Corralation between National Retail and Lockheed Martin

Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.64 times more return on investment than Lockheed Martin. However, National Retail Properties is 1.56 times less risky than Lockheed Martin. It trades about 0.07 of its potential returns per unit of risk. Lockheed Martin is currently generating about 0.02 per unit of risk. If you would invest  3,559  in National Retail Properties on April 19, 2025 and sell it today you would earn a total of  149.00  from holding National Retail Properties or generate 4.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

National Retail Properties  vs.  Lockheed Martin

National Retail Prop

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lockheed Martin

Risk-Adjusted Performance

Weak

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

Pair Trading with National Retail and Lockheed Martin

The main advantage of trading using opposite National Retail and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail 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 National Retail Properties 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.