Correlation Between Rocket Lab and QC Copper
Can any of the company-specific risk be diversified away by investing in both Rocket Lab and QC Copper 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 QC Copper 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 QC Copper and, you can compare the effects of market volatilities on Rocket Lab and QC Copper 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 QC Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Lab and QC Copper.
Diversification Opportunities for Rocket Lab and QC Copper
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rocket and QCCUF is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and QC Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QC Copper 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 QC Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QC Copper has no effect on the direction of Rocket Lab i.e., Rocket Lab and QC Copper go up and down completely randomly.
Pair Corralation between Rocket Lab and QC Copper
Given the investment horizon of 90 days Rocket Lab USA is expected to generate 1.12 times more return on investment than QC Copper. However, Rocket Lab is 1.12 times more volatile than QC Copper and. It trades about 0.67 of its potential returns per unit of risk. QC Copper and is currently generating about -0.02 per unit of risk. If you would invest 1,070 in Rocket Lab USA on September 1, 2024 and sell it today you would earn a total of 1,658 from holding Rocket Lab USA or generate 154.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Lab USA vs. QC Copper and
Performance |
| Timeline |
| Rocket Lab USA |
| QC Copper |
Rocket Lab and QC Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Lab and QC Copper
The main advantage of trading using opposite Rocket Lab and QC Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Lab position performs unexpectedly, QC Copper 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 QC Copper will offset losses from the drop in QC Copper's long position.| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
| QC Copper vs. Palantir Technologies Class | QC Copper vs. Scottie Resources Corp | QC Copper vs. FactSet Research Systems | QC Copper vs. Empire State Realty |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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