Correlation Between Rocket Companies and National Bank
Can any of the company-specific risk be diversified away by investing in both Rocket Companies and National Bank 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 National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and National Bank Holdings, you can compare the effects of market volatilities on Rocket Companies and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and National Bank.
Diversification Opportunities for Rocket Companies and National Bank
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rocket and National is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Rocket Companies i.e., Rocket Companies and National Bank go up and down completely randomly.
Pair Corralation between Rocket Companies and National Bank
Considering the 90-day investment horizon Rocket Companies is expected to generate 1.59 times more return on investment than National Bank. However, Rocket Companies is 1.59 times more volatile than National Bank Holdings. It trades about 0.06 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.06 per unit of risk. If you would invest 895.00 in Rocket Companies on September 1, 2024 and sell it today you would earn a total of 558.00 from holding Rocket Companies or generate 62.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Companies vs. National Bank Holdings
Performance |
| Timeline |
| Rocket Companies |
| National Bank Holdings |
Rocket Companies and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and National Bank
The main advantage of trading using opposite Rocket Companies and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank'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 |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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