Correlation Between Rocket Companies and Trinity Capital
Can any of the company-specific risk be diversified away by investing in both Rocket Companies and Trinity Capital 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 Trinity Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Companies and Trinity Capital, you can compare the effects of market volatilities on Rocket Companies and Trinity Capital 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 Trinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and Trinity Capital.
Diversification Opportunities for Rocket Companies and Trinity Capital
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rocket and Trinity is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Capital 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 Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of Rocket Companies i.e., Rocket Companies and Trinity Capital go up and down completely randomly.
Pair Corralation between Rocket Companies and Trinity Capital
Considering the 90-day investment horizon Rocket Companies is expected to generate 3.99 times more return on investment than Trinity Capital. However, Rocket Companies is 3.99 times more volatile than Trinity Capital. It trades about 0.24 of its potential returns per unit of risk. Trinity Capital is currently generating about 0.28 per unit of risk. If you would invest 1,126 in Rocket Companies on November 1, 2024 and sell it today you would earn a total of 158.00 from holding Rocket Companies or generate 14.03% 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. Trinity Capital
Performance |
| Timeline |
| Rocket Companies |
| Trinity Capital |
Rocket Companies and Trinity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Companies and Trinity Capital
The main advantage of trading using opposite Rocket Companies and Trinity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Companies position performs unexpectedly, Trinity Capital 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 Trinity Capital will offset losses from the drop in Trinity Capital'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 |
| Trinity Capital vs. Carlyle Secured Lending | Trinity Capital vs. Sixth Street Specialty | Trinity Capital vs. Hercules Capital | Trinity Capital vs. BlackRock TCP Capital |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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