Correlation Between Rocket Companies and Metal Sky
Can any of the company-specific risk be diversified away by investing in both Rocket Companies and Metal Sky 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 Metal Sky into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and Metal Sky Star, you can compare the effects of market volatilities on Rocket Companies and Metal Sky 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 Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and Metal Sky.
Diversification Opportunities for Rocket Companies and Metal Sky
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rocket and Metal is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Rocket Companies i.e., Rocket Companies and Metal Sky go up and down completely randomly.
Pair Corralation between Rocket Companies and Metal Sky
Considering the 90-day investment horizon Rocket Companies is expected to generate 1.19 times more return on investment than Metal Sky. However, Rocket Companies is 1.19 times more volatile than Metal Sky Star. It trades about 0.14 of its potential returns per unit of risk. Metal Sky Star is currently generating about 0.05 per unit of risk. If you would invest 1,111 in Rocket Companies on October 25, 2024 and sell it today you would earn a total of 64.50 from holding Rocket Companies or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Companies vs. Metal Sky Star
Performance |
| Timeline |
| Rocket Companies |
| Metal Sky Star |
Rocket Companies and Metal Sky Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and Metal Sky
The main advantage of trading using opposite Rocket Companies and Metal Sky positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies position performs unexpectedly, Metal Sky 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 Metal Sky will offset losses from the drop in Metal Sky's long position.| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Walker Dunlop |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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