Correlation Between Rocket Lab and CYIOS
Can any of the company-specific risk be diversified away by investing in both Rocket Lab and CYIOS 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 CYIOS 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 CYIOS, you can compare the effects of market volatilities on Rocket Lab and CYIOS 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 CYIOS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Lab and CYIOS.
Diversification Opportunities for Rocket Lab and CYIOS
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rocket and CYIOS is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and CYIOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CYIOS 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 CYIOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CYIOS has no effect on the direction of Rocket Lab i.e., Rocket Lab and CYIOS go up and down completely randomly.
Pair Corralation between Rocket Lab and CYIOS
Given the investment horizon of 90 days Rocket Lab USA is expected to generate 1.14 times more return on investment than CYIOS. However, Rocket Lab is 1.14 times more volatile than CYIOS. It trades about 0.52 of its potential returns per unit of risk. CYIOS is currently generating about -0.07 per unit of risk. If you would invest 1,147 in Rocket Lab USA on August 30, 2024 and sell it today you would earn a total of 1,420 from holding Rocket Lab USA or generate 123.8% 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. CYIOS
Performance |
| Timeline |
| Rocket Lab USA |
| CYIOS |
Rocket Lab and CYIOS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Lab and CYIOS
The main advantage of trading using opposite Rocket Lab and CYIOS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab position performs unexpectedly, CYIOS 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 CYIOS will offset losses from the drop in CYIOS'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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |