Correlation Between Rocket Lab and Joby Aviation
Can any of the company-specific risk be diversified away by investing in both Rocket Lab and Joby Aviation 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 Joby Aviation 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 Joby Aviation, you can compare the effects of market volatilities on Rocket Lab and Joby Aviation 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 Joby Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Lab and Joby Aviation.
Diversification Opportunities for Rocket Lab and Joby Aviation
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rocket and Joby is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation 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 Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Rocket Lab i.e., Rocket Lab and Joby Aviation go up and down completely randomly.
Pair Corralation between Rocket Lab and Joby Aviation
Given the investment horizon of 90 days Rocket Lab USA is expected to generate 0.9 times more return on investment than Joby Aviation. However, Rocket Lab USA is 1.11 times less risky than Joby Aviation. It trades about 0.11 of its potential returns per unit of risk. Joby Aviation is currently generating about 0.06 per unit of risk. If you would invest 394.00 in Rocket Lab USA on August 28, 2024 and sell it today you would earn a total of 2,012 from holding Rocket Lab USA or generate 510.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Lab USA vs. Joby Aviation
Performance |
| Timeline |
| Rocket Lab USA |
| Joby Aviation |
Rocket Lab and Joby Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Lab and Joby Aviation
The main advantage of trading using opposite Rocket Lab and Joby Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab position performs unexpectedly, Joby Aviation 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 Joby Aviation will offset losses from the drop in Joby Aviation's long position.| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
| Joby Aviation vs. Archer Aviation | Joby Aviation vs. Lilium NV | Joby Aviation vs. Blade Air Mobility | Joby Aviation vs. Rocket Lab USA |
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 Stocks Directory module to find actively traded stocks across global markets.
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