Correlation Between Lockheed Martin and Walgreens Boots

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

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

Diversification Opportunities for Lockheed Martin and Walgreens Boots

0.78

Correlation Coefficient

Lockheed Martin  Walgreens Boots

Poor diversification

The 3 months correlation between Lockheed and Walgreens is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin Corp and Walgreens Boots Alliance, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walgreens Boots Alliance, and Lockheed Martin 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 Lockheed Martin Corp are associated (or correlated) with Walgreens Boots. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walgreens Boots Alliance, has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Walgreens Boots go up and down completely randomly.

Pair Corralation between Lockheed Martin and Walgreens Boots

Assuming the 90 days trading horizon Lockheed Martin is expected to generate 1.34 times less return on investment than Walgreens Boots. In addition to that, Lockheed Martin is 1.75 times more volatile than Walgreens Boots Alliance,. It trades about 0.1 of its total potential returns per unit of risk. Walgreens Boots Alliance, is currently generating about 0.24 per unit of volatility. If you would invest  421,000  in Walgreens Boots Alliance, on April 22, 2025 and sell it today you would earn a total of  74,000  from holding Walgreens Boots Alliance, or generate 17.58% return on investment over 90 days.

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

Lockheed Martin Corp  vs.  Walgreens Boots Alliance,

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.

Walgreens Boots Alliance,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walgreens Boots Alliance, are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Walgreens Boots sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lockheed Martin and Walgreens Boots

The main advantage of trading using opposite Lockheed Martin and Walgreens Boots positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Walgreens Boots 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 Walgreens Boots will offset losses from the drop in Walgreens Boots' long position.

The idea behind Lockheed Martin Corp and Walgreens Boots Alliance, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.