Correlation Between Vertical Aerospace and Terran Orbital
Can any of the company-specific risk be diversified away by investing in both Vertical Aerospace and Terran Orbital 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 Vertical Aerospace and Terran Orbital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vertical Aerospace and Terran Orbital Corp, you can compare the effects of market volatilities on Vertical Aerospace and Terran Orbital 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 Vertical Aerospace with a short position of Terran Orbital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vertical Aerospace and Terran Orbital.
Diversification Opportunities for Vertical Aerospace and Terran Orbital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vertical and Terran is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vertical Aerospace and Terran Orbital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terran Orbital Corp and Vertical Aerospace 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 Vertical Aerospace are associated (or correlated) with Terran Orbital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terran Orbital Corp has no effect on the direction of Vertical Aerospace i.e., Vertical Aerospace and Terran Orbital go up and down completely randomly.
Pair Corralation between Vertical Aerospace and Terran Orbital
Given the investment horizon of 90 days Vertical Aerospace is expected to generate 13.14 times more return on investment than Terran Orbital. However, Vertical Aerospace is 13.14 times more volatile than Terran Orbital Corp. It trades about 0.04 of its potential returns per unit of risk. Terran Orbital Corp is currently generating about -0.2 per unit of risk. If you would invest 707.00 in Vertical Aerospace on August 28, 2024 and sell it today you would lose (10.00) from holding Vertical Aerospace or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.81% |
| Values | Daily Returns |
Vertical Aerospace vs. Terran Orbital Corp
Performance |
| Timeline |
| Vertical Aerospace |
| Terran Orbital Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vertical Aerospace and Terran Orbital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vertical Aerospace and Terran Orbital
The main advantage of trading using opposite Vertical Aerospace and Terran Orbital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vertical Aerospace position performs unexpectedly, Terran Orbital 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 Terran Orbital will offset losses from the drop in Terran Orbital's long position.| Vertical Aerospace vs. Sidus Space | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Momentus | Vertical Aerospace vs. Planet Labs PBC |
| Terran Orbital vs. Intuitive Machines | Terran Orbital vs. Sidus Space | Terran Orbital vs. Redwire Corp | Terran Orbital vs. Rocket Lab USA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |