Correlation Between Hexcel and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Hexcel 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 Hexcel and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hexcel and Rocket Lab USA, you can compare the effects of market volatilities on Hexcel 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 Hexcel with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hexcel and Rocket Lab.
Diversification Opportunities for Hexcel and Rocket Lab
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hexcel and Rocket is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hexcel 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 Hexcel 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 Hexcel 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 Hexcel i.e., Hexcel and Rocket Lab go up and down completely randomly.
Pair Corralation between Hexcel and Rocket Lab
Considering the 90-day investment horizon Hexcel is expected to generate 22.55 times less return on investment than Rocket Lab. But when comparing it to its historical volatility, Hexcel is 2.42 times less risky than Rocket Lab. It trades about 0.01 of its potential returns per unit of risk. Rocket Lab USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 415.00 in Rocket Lab USA on August 24, 2024 and sell it today you would earn a total of 1,911 from holding Rocket Lab USA or generate 460.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hexcel vs. Rocket Lab USA
Performance |
| Timeline |
| Hexcel |
| Rocket Lab USA |
Hexcel and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hexcel and Rocket Lab
The main advantage of trading using opposite Hexcel and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hexcel 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.The idea behind Hexcel and Rocket Lab USA 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.| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |