Correlation Between Rocket Lab and Boeing
Can any of the company-specific risk be diversified away by investing in both Rocket Lab and Boeing 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 Rocket Lab and Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Lab USA and The Boeing, you can compare the effects of market volatilities on Rocket Lab and Boeing 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 Rocket Lab with a short position of Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Lab and Boeing.
Diversification Opportunities for Rocket Lab and Boeing
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rocket and Boeing is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing and Rocket Lab 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 Rocket Lab USA are associated (or correlated) with Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Rocket Lab i.e., Rocket Lab and Boeing go up and down completely randomly.
Pair Corralation between Rocket Lab and Boeing
Given the investment horizon of 90 days Rocket Lab USA is expected to generate 2.2 times more return on investment than Boeing. However, Rocket Lab is 2.2 times more volatile than The Boeing. It trades about 0.16 of its potential returns per unit of risk. The Boeing is currently generating about -0.02 per unit of risk. If you would invest 420.00 in Rocket Lab USA on August 25, 2024 and sell it today you would earn a total of 1,906 from holding Rocket Lab USA or generate 453.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Lab USA vs. The Boeing
Performance |
| Timeline |
| Rocket Lab USA |
| Boeing |
Rocket Lab and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Lab and Boeing
The main advantage of trading using opposite Rocket Lab and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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