Correlation Between Lockheed Martin and Eve Holding

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

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

Diversification Opportunities for Lockheed Martin and Eve Holding

-0.67

Correlation Coefficient

Lockheed Martin  Eve Holding

Excellent diversification

The 3 months correlation between Lockheed and Eve is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Eve Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eve Holding 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 Eve Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eve Holding has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Eve Holding go up and down completely randomly.

Pair Corralation between Lockheed Martin and Eve Holding

Considering the 90-day investment horizon Lockheed Martin is expected to under-perform the Eve Holding. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 4.7 times less risky than Eve Holding. The stock trades about -0.4 of its potential returns per unit of risk. The Eve Holding is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  335.00  in Eve Holding on September 23, 2024 and sell it today you would earn a total of  166.00  from holding Eve Holding or generate 49.55% return on investment over 90 days.

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

Lockheed Martin  vs.  Eve Holding

Lockheed Martin

Risk-Adjusted Performance

0 of 100

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 abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Eve Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lockheed Martin and Eve Holding

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

The idea behind Lockheed Martin and Eve Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.