Correlation Between Triumph and Rocket Lab
Can any of the company-specific risk be diversified away by investing in both Triumph 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 Triumph and Rocket Lab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Triumph Group and Rocket Lab USA, you can compare the effects of market volatilities on Triumph 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 Triumph with a short position of Rocket Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Triumph and Rocket Lab.
Diversification Opportunities for Triumph and Rocket Lab
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Triumph and Rocket is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group 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 Triumph 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 Triumph Group 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 Triumph i.e., Triumph and Rocket Lab go up and down completely randomly.
Pair Corralation between Triumph and Rocket Lab
Considering the 90-day investment horizon Triumph is expected to generate 3.34 times less return on investment than Rocket Lab. But when comparing it to its historical volatility, Triumph Group is 1.63 times less risky than Rocket Lab. It trades about 0.28 of its potential returns per unit of risk. Rocket Lab USA is currently generating about 0.58 of returns per unit of risk over similar time horizon. If you would invest 1,096 in Rocket Lab USA on August 31, 2024 and sell it today you would earn a total of 1,471 from holding Rocket Lab USA or generate 134.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Triumph Group vs. Rocket Lab USA
Performance |
| Timeline |
| Triumph Group |
| Rocket Lab USA |
Triumph and Rocket Lab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Triumph and Rocket Lab
The main advantage of trading using opposite Triumph and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph 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.| Triumph vs. Mercury Systems | Triumph vs. Curtiss Wright | Triumph vs. Hexcel | Triumph vs. Ducommun Incorporated |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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