Correlation Between Vertical Aerospace and Intuitive Machines

Can any of the company-specific risk be diversified away by investing in both Vertical Aerospace and Intuitive Machines 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 Vertical Aerospace and Intuitive Machines into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Vertical Aerospace and Intuitive Machines

0.5

Correlation Coefficient

Vertical Aerospace  Intuitive Machines

Very weak diversification

The 3 months correlation between Vertical and Intuitive is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vertical Aerospace and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines and Vertical Aerospace 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 Vertical Aerospace are associated (or correlated) with Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Vertical Aerospace i.e., Vertical Aerospace and Intuitive Machines go up and down completely randomly.

Pair Corralation between Vertical Aerospace and Intuitive Machines

Given the investment horizon of 90 days Vertical Aerospace is expected to under-perform the Intuitive Machines. But the stock apears to be less risky and, when comparing its historical volatility, Vertical Aerospace is 1.07 times less risky than Intuitive Machines. The stock trades about -0.2 of its potential returns per unit of risk. The Intuitive Machines is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,894  in Intuitive Machines on December 30, 2024 and sell it today you would lose (1,087) from holding Intuitive Machines or give up 57.39% of portfolio value over 90 days.

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

Vertical Aerospace  vs.  Intuitive Machines

Vertical Aerospace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertical Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Intuitive Machines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vertical Aerospace and Intuitive Machines

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

The idea behind Vertical Aerospace and Intuitive Machines 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 Global Correlations module to find global opportunities by holding instruments from different markets.