Correlation Between Lockheed Martin and HEICO

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

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

Diversification Opportunities for Lockheed Martin and HEICO

-0.43

Correlation Coefficient

Lockheed Martin  HEICO

Very good diversification

The 3 months correlation between Lockheed and HEICO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO 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 HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and HEICO go up and down completely randomly.

Pair Corralation between Lockheed Martin and HEICO

Assuming the 90 days horizon Lockheed Martin is expected to under-perform the HEICO. In addition to that, Lockheed Martin is 1.06 times more volatile than HEICO. It trades about -0.08 of its total potential returns per unit of risk. HEICO is currently generating about 0.17 per unit of volatility. If you would invest  21,702  in HEICO on April 25, 2025 and sell it today you would earn a total of  5,118  from holding HEICO or generate 23.58% return on investment over 90 days.

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

Lockheed Martin  vs.  HEICO

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HEICO

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HEICO are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HEICO reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lockheed Martin and HEICO

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

The idea behind Lockheed Martin and HEICO 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.