Correlation Between Rocket Companies and Federal Hme
Can any of the company-specific risk be diversified away by investing in both Rocket Companies and Federal Hme 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 Companies and Federal Hme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and Federal Hme 655, you can compare the effects of market volatilities on Rocket Companies and Federal Hme 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 Companies with a short position of Federal Hme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and Federal Hme.
Diversification Opportunities for Rocket Companies and Federal Hme
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rocket and Federal is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Federal Hme 655 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Hme 655 and Rocket Companies 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 Companies are associated (or correlated) with Federal Hme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Hme 655 has no effect on the direction of Rocket Companies i.e., Rocket Companies and Federal Hme go up and down completely randomly.
Pair Corralation between Rocket Companies and Federal Hme
Considering the 90-day investment horizon Rocket Companies is expected to under-perform the Federal Hme. But the stock apears to be less risky and, when comparing its historical volatility, Rocket Companies is 1.17 times less risky than Federal Hme. The stock trades about -0.09 of its potential returns per unit of risk. The Federal Hme 655 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 715.00 in Federal Hme 655 on November 8, 2024 and sell it today you would earn a total of 284.00 from holding Federal Hme 655 or generate 39.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Rocket Companies vs. Federal Hme 655
Performance |
| Timeline |
| Rocket Companies |
| Federal Hme 655 |
Rocket Companies and Federal Hme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and Federal Hme
The main advantage of trading using opposite Rocket Companies and Federal Hme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies position performs unexpectedly, Federal Hme 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 Federal Hme will offset losses from the drop in Federal Hme's long position.| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
| Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal National Mortgage |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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