Correlation Between L3Harris Technologies and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both L3Harris Technologies 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 L3Harris Technologies and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between L3Harris Technologies and Rocket Lab USA, you can compare the effects of market volatilities on L3Harris Technologies 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 L3Harris Technologies with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of L3Harris Technologies and Rocket Lab.
Diversification Opportunities for L3Harris Technologies and Rocket Lab
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between L3Harris and Rocket is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies 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 L3Harris Technologies i.e., L3Harris Technologies and Rocket Lab go up and down completely randomly.
Pair Corralation between L3Harris Technologies and Rocket Lab
Considering the 90-day investment horizon L3Harris Technologies is expected to generate 5.61 times less return on investment than Rocket Lab. But when comparing it to its historical volatility, L3Harris Technologies is 6.4 times less risky than Rocket Lab. It trades about 0.18 of its potential returns per unit of risk. Rocket Lab USA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,559 in Rocket Lab USA on October 23, 2024 and sell it today you would earn a total of 568.00 from holding Rocket Lab USA or generate 22.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
L3Harris Technologies vs. Rocket Lab USA
Performance |
| Timeline |
| L3Harris Technologies |
| Rocket Lab USA |
L3Harris Technologies and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with L3Harris Technologies and Rocket Lab
The main advantage of trading using opposite L3Harris Technologies and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if L3Harris Technologies 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.| L3Harris Technologies vs. Lockheed Martin | L3Harris Technologies vs. General Dynamics | L3Harris Technologies vs. Raytheon Technologies Corp | L3Harris Technologies vs. Huntington Ingalls Industries |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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