Correlation Between Plexus Corp and LOCKHEED

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

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

Diversification Opportunities for Plexus Corp and LOCKHEED

-0.66

Correlation Coefficient

Plexus Corp  LOCKHEED

Excellent diversification

The 3 months correlation between Plexus and LOCKHEED is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Plexus Corp and LOCKHEED MARTIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOCKHEED MARTIN P and Plexus Corp 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 Plexus Corp are associated (or correlated) with LOCKHEED. 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 P has no effect on the direction of Plexus Corp i.e., Plexus Corp and LOCKHEED go up and down completely randomly.

Pair Corralation between Plexus Corp and LOCKHEED

Given the investment horizon of 90 days Plexus Corp is expected to generate 1.61 times more return on investment than LOCKHEED. However, Plexus Corp is 1.61 times more volatile than LOCKHEED MARTIN P. It trades about 0.21 of its potential returns per unit of risk. LOCKHEED MARTIN P is currently generating about -0.17 per unit of risk. If you would invest  12,784  in Plexus Corp on September 17, 2024 and sell it today you would earn a total of  3,827  from holding Plexus Corp or generate 29.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Plexus Corp  vs.  LOCKHEED MARTIN P

Plexus Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plexus Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Plexus Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

LOCKHEED MARTIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOCKHEED MARTIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LOCKHEED MARTIN P investors.

Pair Trading with Plexus Corp and LOCKHEED

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

The idea behind Plexus Corp and LOCKHEED MARTIN P 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.