Correlation Between Lockheed Martin and Mosaic

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

By analyzing existing cross correlation between Lockheed Martin and The Mosaic, you can compare the effects of market volatilities on Lockheed Martin and Mosaic 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 Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Mosaic.

Diversification Opportunities for Lockheed Martin and Mosaic

-0.63

Correlation Coefficient

Lockheed Martin  Mosaic

Excellent diversification

The 3 months correlation between Lockheed and Mosaic is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 are associated (or correlated) with Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Mosaic go up and down completely randomly.

Pair Corralation between Lockheed Martin and Mosaic

Assuming the 90 days trading horizon Lockheed Martin is expected to under-perform the Mosaic. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 1.03 times less risky than Mosaic. The stock trades about -0.03 of its potential returns per unit of risk. The The Mosaic is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  53,650  in The Mosaic on April 23, 2025 and sell it today you would earn a total of  15,022  from holding The Mosaic or generate 28.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lockheed Martin  vs.  The Mosaic

Lockheed Martin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lockheed Martin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lockheed Martin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mosaic

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Mosaic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lockheed Martin and Mosaic

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

The idea behind Lockheed Martin and The Mosaic 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.