Correlation Between Virgin Galactic and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Virgin Galactic 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 Virgin Galactic and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Galactic Holdings and Rocket Lab USA, you can compare the effects of market volatilities on Virgin Galactic 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 Virgin Galactic with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Galactic and Rocket Lab.
Diversification Opportunities for Virgin Galactic and Rocket Lab
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Virgin and Rocket is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Galactic Holdings 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 Virgin Galactic 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 Virgin Galactic Holdings 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 Virgin Galactic i.e., Virgin Galactic and Rocket Lab go up and down completely randomly.
Pair Corralation between Virgin Galactic and Rocket Lab
Given the investment horizon of 90 days Virgin Galactic Holdings is expected to under-perform the Rocket Lab. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Galactic Holdings is 2.08 times less risky than Rocket Lab. The stock trades about -0.29 of its potential returns per unit of risk. The Rocket Lab USA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,496 in Rocket Lab USA on November 2, 2024 and sell it today you would earn a total of 357.00 from holding Rocket Lab USA or generate 14.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Galactic Holdings vs. Rocket Lab USA
Performance |
| Timeline |
| Virgin Galactic Holdings |
| Rocket Lab USA |
Virgin Galactic and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Galactic and Rocket Lab
The main advantage of trading using opposite Virgin Galactic and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Galactic 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.| Virgin Galactic vs. Planet Labs PBC | Virgin Galactic vs. Eve Holding | Virgin Galactic vs. Redwire Corp | Virgin Galactic vs. Lockheed Martin |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |