Correlation Between SIFCO Industries and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both SIFCO Industries and Rocket Lab 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 SIFCO Industries and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIFCO Industries and Rocket Lab USA, you can compare the effects of market volatilities on SIFCO Industries and Rocket Lab 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 SIFCO Industries with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIFCO Industries and Rocket Lab.
Diversification Opportunities for SIFCO Industries and Rocket Lab
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIFCO and Rocket is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SIFCO Industries and Rocket Lab USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Lab USA and SIFCO Industries 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 SIFCO Industries are associated (or correlated) with Rocket Lab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Lab USA has no effect on the direction of SIFCO Industries i.e., SIFCO Industries and Rocket Lab go up and down completely randomly.
Pair Corralation between SIFCO Industries and Rocket Lab
Considering the 90-day investment horizon SIFCO Industries is expected to generate 17.87 times less return on investment than Rocket Lab. But when comparing it to its historical volatility, SIFCO Industries is 2.66 times less risky than Rocket Lab. It trades about 0.08 of its potential returns per unit of risk. Rocket Lab USA is currently generating about 0.52 of returns per unit of risk over similar time horizon. If you would invest 1,126 in Rocket Lab USA on August 27, 2024 and sell it today you would earn a total of 1,280 from holding Rocket Lab USA or generate 113.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIFCO Industries vs. Rocket Lab USA
Performance |
| Timeline |
| SIFCO Industries |
| Rocket Lab USA |
SIFCO Industries and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIFCO Industries and Rocket Lab
The main advantage of trading using opposite SIFCO Industries and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIFCO Industries position performs unexpectedly, Rocket Lab 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 Lab will offset losses from the drop in Rocket Lab's long position.| SIFCO Industries vs. Ducommun Incorporated | SIFCO Industries vs. Park Electrochemical | SIFCO Industries vs. National Presto Industries | SIFCO Industries vs. Astronics |
| Rocket Lab vs. Redwire Corp | Rocket Lab vs. Momentus | Rocket Lab vs. Planet Labs PBC | Rocket Lab vs. Virgin Galactic Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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