Correlation Between Lockheed Martin and Eaton PLC
Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and Eaton PLC 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 Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lockheed Martin and Eaton PLC, you can compare the effects of market volatilities on Lockheed Martin and Eaton PLC 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 Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and Eaton PLC.
Diversification Opportunities for Lockheed Martin and Eaton PLC
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lockheed and Eaton is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC 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 Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and Eaton PLC go up and down completely randomly.
Pair Corralation between Lockheed Martin and Eaton PLC
Considering the 90-day investment horizon Lockheed Martin is expected to generate 2.19 times less return on investment than Eaton PLC. But when comparing it to its historical volatility, Lockheed Martin is 1.47 times less risky than Eaton PLC. It trades about 0.03 of its potential returns per unit of risk. Eaton PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23,856 in Eaton PLC on October 10, 2025 and sell it today you would earn a total of 8,411 from holding Eaton PLC or generate 35.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lockheed Martin vs. Eaton PLC
Performance |
| Timeline |
| Lockheed Martin |
| Eaton PLC |
Lockheed Martin and Eaton PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lockheed Martin and Eaton PLC
The main advantage of trading using opposite Lockheed Martin and Eaton PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lockheed Martin position performs unexpectedly, Eaton PLC 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 Eaton PLC will offset losses from the drop in Eaton PLC's long position.| Lockheed Martin vs. General Dynamics | Lockheed Martin vs. Northrop Grumman | Lockheed Martin vs. Automatic Data Processing | Lockheed Martin vs. Honeywell International |
| Eaton PLC vs. Parker Hannifin | Eaton PLC vs. The Boeing | Eaton PLC vs. Emerson Electric | Eaton PLC vs. Deere Company |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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