Correlation Between Eve Holding and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Eve Holding 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 Eve Holding and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eve Holding and Rocket Lab USA, you can compare the effects of market volatilities on Eve Holding 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 Eve Holding with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eve Holding and Rocket Lab.
Diversification Opportunities for Eve Holding and Rocket Lab
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eve and Rocket is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Eve Holding 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 Eve Holding 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 Eve Holding 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 Eve Holding i.e., Eve Holding and Rocket Lab go up and down completely randomly.
Pair Corralation between Eve Holding and Rocket Lab
Given the investment horizon of 90 days Eve Holding is expected to under-perform the Rocket Lab. But the stock apears to be less risky and, when comparing its historical volatility, Eve Holding is 1.18 times less risky than Rocket Lab. The stock trades about -0.03 of its potential returns per unit of risk. The Rocket Lab USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Rocket Lab USA on August 27, 2024 and sell it today you would earn a total of 1,926 from holding Rocket Lab USA or generate 481.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eve Holding vs. Rocket Lab USA
Performance |
| Timeline |
| Eve Holding |
| Rocket Lab USA |
Eve Holding and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eve Holding and Rocket Lab
The main advantage of trading using opposite Eve Holding and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eve Holding 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.| Eve Holding vs. Heico | Eve Holding vs. Mercury Systems | Eve Holding vs. AeroVironment | Eve Holding vs. Howmet Aerospace |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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