Correlation Between Distribuidora and Lockheed Martin

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

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

Diversification Opportunities for Distribuidora and Lockheed Martin

-0.29

Correlation Coefficient

Distribuidora  Lockheed Martin

Very good diversification

The 3 months correlation between Distribuidora and Lockheed is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Distribuidora de Gas 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 Distribuidora 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 Distribuidora de Gas 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 Distribuidora i.e., Distribuidora and Lockheed Martin go up and down completely randomly.

Pair Corralation between Distribuidora and Lockheed Martin

Assuming the 90 days trading horizon Distribuidora de Gas is expected to generate 1.75 times more return on investment than Lockheed Martin. However, Distribuidora is 1.75 times more volatile than Lockheed Martin Corp. It trades about 0.08 of its potential returns per unit of risk. Lockheed Martin Corp is currently generating about 0.1 per unit of risk. If you would invest  124,000  in Distribuidora de Gas on April 22, 2025 and sell it today you would earn a total of  17,000  from holding Distribuidora de Gas or generate 13.71% return on investment over 90 days.

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

Distribuidora de Gas  vs.  Lockheed Martin Corp

Distribuidora de Gas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Distribuidora de Gas are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Distribuidora sustained solid returns over the last few months and may actually be approaching a breakup point.

Lockheed Martin Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lockheed Martin Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lockheed Martin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Distribuidora and Lockheed Martin

The main advantage of trading using opposite Distribuidora and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distribuidora 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 Distribuidora de Gas 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.