Correlation Between Rocket Companies and Federal National
Can any of the company-specific risk be diversified away by investing in both Rocket Companies and Federal National 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 National 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 National Mortgage, you can compare the effects of market volatilities on Rocket Companies and Federal National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and Federal National.
Diversification Opportunities for Rocket Companies and Federal National
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rocket and Federal is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Federal National Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal National Mortgage 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal National Mortgage has no effect on the direction of Rocket Companies i.e., Rocket Companies and Federal National go up and down completely randomly.
Pair Corralation between Rocket Companies and Federal National
Considering the 90-day investment horizon Rocket Companies is expected to under-perform the Federal National. But the stock apears to be less risky and, when comparing its historical volatility, Rocket Companies is 8.08 times less risky than Federal National. The stock trades about -0.21 of its potential returns per unit of risk. The Federal National Mortgage is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,599,500 in Federal National Mortgage on August 29, 2024 and sell it today you would earn a total of 930,500 from holding Federal National Mortgage or generate 58.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Rocket Companies vs. Federal National Mortgage
Performance |
| Timeline |
| Rocket Companies |
| Federal National Mortgage |
Rocket Companies and Federal National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and Federal National
The main advantage of trading using opposite Rocket Companies and Federal National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies position performs unexpectedly, Federal National 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 National will offset losses from the drop in Federal National'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 National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan | Federal National vs. Federal Home Loan |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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