Correlation Between Momentus and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Momentus 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 Momentus and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Momentus and Rocket Lab USA, you can compare the effects of market volatilities on Momentus 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 Momentus with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Momentus and Rocket Lab.
Diversification Opportunities for Momentus and Rocket Lab
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Momentus and Rocket is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Momentus 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 Momentus 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 Momentus 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 Momentus i.e., Momentus and Rocket Lab go up and down completely randomly.
Pair Corralation between Momentus and Rocket Lab
Given the investment horizon of 90 days Momentus is expected to generate 1.25 times less return on investment than Rocket Lab. In addition to that, Momentus is 3.43 times more volatile than Rocket Lab USA. It trades about 0.06 of its total potential returns per unit of risk. Rocket Lab USA is currently generating about 0.27 per unit of volatility. If you would invest 439.00 in Rocket Lab USA on August 24, 2024 and sell it today you would earn a total of 1,802 from holding Rocket Lab USA or generate 410.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Momentus vs. Rocket Lab USA
Performance |
| Timeline |
| Momentus |
| Rocket Lab USA |
Momentus and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Momentus and Rocket Lab
The main advantage of trading using opposite Momentus and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Momentus 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.| Momentus vs. Planet Labs PBC | Momentus vs. Rocket Lab USA | Momentus vs. Redwire Corp | Momentus vs. Virgin Galactic Holdings |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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