Correlation Between LOCKHEED and Kinsale Capital

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

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

Diversification Opportunities for LOCKHEED and Kinsale Capital

-0.22

Correlation Coefficient

LOCKHEED  Kinsale Capital

Very good diversification

The 3 months correlation between LOCKHEED and Kinsale is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding LOCKHEED MARTIN P and Kinsale Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinsale Capital Group and LOCKHEED 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 P are associated (or correlated) with Kinsale Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinsale Capital Group has no effect on the direction of LOCKHEED i.e., LOCKHEED and Kinsale Capital go up and down completely randomly.

Pair Corralation between LOCKHEED and Kinsale Capital

Assuming the 90 days trading horizon LOCKHEED MARTIN P is expected to under-perform the Kinsale Capital. But the bond apears to be less risky and, when comparing its historical volatility, LOCKHEED MARTIN P is 3.57 times less risky than Kinsale Capital. The bond trades about -0.18 of its potential returns per unit of risk. The Kinsale Capital Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  45,340  in Kinsale Capital Group on September 15, 2024 and sell it today you would earn a total of  5,333  from holding Kinsale Capital Group or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.63%
Values	Daily Returns

LOCKHEED MARTIN P  vs.  Kinsale Capital Group

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 latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for LOCKHEED MARTIN P investors.

Kinsale Capital Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinsale Capital Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Kinsale Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LOCKHEED and Kinsale Capital

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

The idea behind LOCKHEED MARTIN P and Kinsale Capital Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .