Correlation Between QUALCOMM Incorporated and Lockheed Martin

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

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

Diversification Opportunities for QUALCOMM Incorporated and Lockheed Martin

0.61

Correlation Coefficient

QUALCOMM Incorporated  Lockheed Martin

Poor diversification

The 3 months correlation between QUALCOMM and Lockheed is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding QUALCOMM Incorporated and Lockheed Martin Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lockheed Martin Corp and QUALCOMM Incorporated 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 QUALCOMM Incorporated 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 Corp has no effect on the direction of QUALCOMM Incorporated i.e., QUALCOMM Incorporated and Lockheed Martin go up and down completely randomly.

Pair Corralation between QUALCOMM Incorporated and Lockheed Martin

Assuming the 90 days trading horizon QUALCOMM Incorporated is expected to generate 2.29 times less return on investment than Lockheed Martin. But when comparing it to its historical volatility, QUALCOMM Incorporated is 1.33 times less risky than Lockheed Martin. It trades about 0.09 of its potential returns per unit of risk. Lockheed Martin Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,867,500  in Lockheed Martin Corp on July 1, 2025 and sell it today you would earn a total of  710,500  from holding Lockheed Martin Corp or generate 24.78% return on investment over 90 days.

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

QUALCOMM Incorporated  vs.  Lockheed Martin Corp

QUALCOMM Incorporated

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in QUALCOMM Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, QUALCOMM Incorporated may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Lockheed Martin Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lockheed Martin Corp are ranked lower than 12 (%) 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.

Pair Trading with QUALCOMM Incorporated and Lockheed Martin

The main advantage of trading using opposite QUALCOMM Incorporated and Lockheed Martin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QUALCOMM Incorporated 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.

The idea behind QUALCOMM Incorporated and Lockheed Martin Corp 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.