Correlation Between Rocket Lab and Vertical Aerospace
Can any of the company-specific risk be diversified away by investing in both Rocket Lab and Vertical Aerospace 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 Vertical Aerospace 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 Vertical Aerospace, you can compare the effects of market volatilities on Rocket Lab and Vertical Aerospace 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 Vertical Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Lab and Vertical Aerospace.
Diversification Opportunities for Rocket Lab and Vertical Aerospace
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rocket and Vertical is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and Vertical Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertical Aerospace 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 Vertical Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertical Aerospace has no effect on the direction of Rocket Lab i.e., Rocket Lab and Vertical Aerospace go up and down completely randomly.
Pair Corralation between Rocket Lab and Vertical Aerospace
Given the investment horizon of 90 days Rocket Lab USA is expected to generate 0.54 times more return on investment than Vertical Aerospace. However, Rocket Lab USA is 1.86 times less risky than Vertical Aerospace. It trades about 0.52 of its potential returns per unit of risk. Vertical Aerospace is currently generating about 0.13 per unit of risk. If you would invest 1,126 in Rocket Lab USA on August 27, 2024 and sell it today you would earn a total of 1,280 from holding Rocket Lab USA or generate 113.68% 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. Vertical Aerospace
Performance |
| Timeline |
| Rocket Lab USA |
| Vertical Aerospace |
Rocket Lab and Vertical Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Lab and Vertical Aerospace
The main advantage of trading using opposite Rocket Lab and Vertical Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab position performs unexpectedly, Vertical Aerospace 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 Vertical Aerospace will offset losses from the drop in Vertical Aerospace's long position.| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
| Vertical Aerospace vs. Redwire Corp | Vertical Aerospace vs. Sidus Space | Vertical Aerospace vs. Rocket Lab USA | Vertical Aerospace vs. Momentus |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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