Correlation Between Regional Management and Rocket Companies
Can any of the company-specific risk be diversified away by investing in both Regional Management and Rocket Companies 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 Regional Management and Rocket Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and Rocket Companies, you can compare the effects of market volatilities on Regional Management and Rocket Companies 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 Regional Management with a short position of Rocket Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and Rocket Companies.
Diversification Opportunities for Regional Management and Rocket Companies
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and Rocket is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies and Regional Management 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 Regional Management Corp are associated (or correlated) with Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Regional Management i.e., Regional Management and Rocket Companies go up and down completely randomly.
Pair Corralation between Regional Management and Rocket Companies
Allowing for the 90-day total investment horizon Regional Management is expected to generate 2.85 times less return on investment than Rocket Companies. But when comparing it to its historical volatility, Regional Management Corp is 1.16 times less risky than Rocket Companies. It trades about 0.02 of its potential returns per unit of risk. Rocket Companies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 826.00 in Rocket Companies on August 27, 2024 and sell it today you would earn a total of 548.00 from holding Rocket Companies or generate 66.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. Rocket Companies
Performance |
| Timeline |
| Regional Management Corp |
| Rocket Companies |
Regional Management and Rocket Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and Rocket Companies
The main advantage of trading using opposite Regional Management and Rocket Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, Rocket Companies 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 Rocket Companies will offset losses from the drop in Rocket Companies' long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| Rocket Companies vs. Loandepot | Rocket Companies vs. Mr Cooper Group | Rocket Companies vs. PennyMac Finl Svcs | Rocket Companies vs. Guild Holdings Co |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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