Correlation Between Plastic Omnium and Lockheed Martin
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and Lockheed Martin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and Lockheed Martin, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of Lockheed Martin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and Lockheed Martin.
Diversification Opportunities for Plastic Omnium and Lockheed Martin
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plastic and Lockheed is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium and Lockheed Martin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and Lockheed Martin go up and down completely randomly.
Pair Corralation between Plastic Omnium and Lockheed Martin
Assuming the 90 days trading horizon Plastic Omnium is expected to generate 1.51 times more return on investment than Lockheed Martin. However, Plastic Omnium is 1.51 times more volatile than Lockheed Martin. It trades about 0.27 of its potential returns per unit of risk. Lockheed Martin is currently generating about 0.01 per unit of risk. If you would invest 823.00 in Plastic Omnium on April 20, 2025 and sell it today you would earn a total of 396.00 from holding Plastic Omnium or generate 48.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
Plastic Omnium vs. Lockheed Martin
Performance |
Timeline |
Plastic Omnium |
Lockheed Martin |
Plastic Omnium and Lockheed Martin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Plastic Omnium and Lockheed Martin
The main advantage of trading using opposite Plastic Omnium and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.Plastic Omnium vs. TEXAS ROADHOUSE | Plastic Omnium vs. Broadwind | Plastic Omnium vs. TITANIUM TRANSPORTGROUP | Plastic Omnium vs. Jupiter Fund Management |
Lockheed Martin vs. FEMALE HEALTH | Lockheed Martin vs. Ramsay Health Care | Lockheed Martin vs. LG Electronics | Lockheed Martin vs. Acadia Healthcare |
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 the Bonds Directory module to find actively traded corporate debentures issued by US companies.
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