Correlation Between Rocket CompaniesInc and Velocity FinancialLlc

Can any of the company-specific risk be diversified away by investing in both Rocket CompaniesInc and Velocity FinancialLlc 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 CompaniesInc and Velocity FinancialLlc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rocket CompaniesInc and Velocity FinancialLlc, you can compare the effects of market volatilities on Rocket CompaniesInc and Velocity FinancialLlc 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 CompaniesInc with a short position of Velocity FinancialLlc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket CompaniesInc and Velocity FinancialLlc.

Diversification Opportunities for Rocket CompaniesInc and Velocity FinancialLlc

0.77

Correlation Coefficient

Rocket CompaniesInc  Velocity FinancialLlc

Poor diversification

The 3 months correlation between Rocket and Velocity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rocket CompaniesInc and Velocity FinancialLlc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velocity FinancialLlc and Rocket CompaniesInc 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 CompaniesInc are associated (or correlated) with Velocity FinancialLlc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velocity FinancialLlc has no effect on the direction of Rocket CompaniesInc i.e., Rocket CompaniesInc and Velocity FinancialLlc go up and down completely randomly.

Pair Corralation between Rocket CompaniesInc and Velocity FinancialLlc

Considering the 90-day investment horizon Rocket CompaniesInc is expected to generate 1.01 times more return on investment than Velocity FinancialLlc. However, Rocket CompaniesInc is 1.01 times more volatile than Velocity FinancialLlc. It trades about 0.05 of its potential returns per unit of risk. Velocity FinancialLlc is currently generating about 0.05 per unit of risk. If you would invest  828.00  in Rocket CompaniesInc on February 5, 2024 and sell it today you would earn a total of  502.00  from holding Rocket CompaniesInc or generate 60.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Rocket CompaniesInc  vs.  Velocity FinancialLlc

Rocket CompaniesInc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket CompaniesInc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Rocket CompaniesInc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Velocity FinancialLlc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Velocity FinancialLlc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, Velocity FinancialLlc may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Rocket CompaniesInc and Velocity FinancialLlc

The main advantage of trading using opposite Rocket CompaniesInc and Velocity FinancialLlc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket CompaniesInc position performs unexpectedly, Velocity FinancialLlc 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 Velocity FinancialLlc will offset losses from the drop in Velocity FinancialLlc's long position.

The idea behind Rocket CompaniesInc and Velocity FinancialLlc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.