Correlation Between Aerojet Rocketdyne and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Aerojet Rocketdyne and Rocket Lab 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 Aerojet Rocketdyne and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerojet Rocketdyne Holdings and Rocket Lab USA, you can compare the effects of market volatilities on Aerojet Rocketdyne and Rocket Lab 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 Aerojet Rocketdyne with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerojet Rocketdyne and Rocket Lab.
Diversification Opportunities for Aerojet Rocketdyne and Rocket Lab
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aerojet and Rocket is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aerojet Rocketdyne Holdings and Rocket Lab USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Lab USA and Aerojet Rocketdyne 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 Aerojet Rocketdyne Holdings are associated (or correlated) with Rocket Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Lab USA has no effect on the direction of Aerojet Rocketdyne i.e., Aerojet Rocketdyne and Rocket Lab go up and down completely randomly.
Pair Corralation between Aerojet Rocketdyne and Rocket Lab
If you would invest 1,126 in Rocket Lab USA on August 27, 2024 and sell it today you would earn a total of 1,200 from holding Rocket Lab USA or generate 106.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Aerojet Rocketdyne Holdings vs. Rocket Lab USA
Performance |
| Timeline |
| Aerojet Rocketdyne |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Rocket Lab USA |
Aerojet Rocketdyne and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerojet Rocketdyne and Rocket Lab
The main advantage of trading using opposite Aerojet Rocketdyne and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerojet Rocketdyne position performs unexpectedly, Rocket Lab 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 Rocket Lab will offset losses from the drop in Rocket Lab's long position.| Aerojet Rocketdyne vs. AAR Corp | Aerojet Rocketdyne vs. Curtiss Wright | Aerojet Rocketdyne vs. Hexcel | Aerojet Rocketdyne vs. Moog Inc |
| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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