Correlation Between Home Point and Rocket Companies

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

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

Diversification Opportunities for Home Point and Rocket Companies

0.0

Correlation Coefficient

Home Point  Rocket Companies

Pay attention - limited upside

The 3 months correlation between Home and Rocket is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Home Point Capital and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies and Home Point 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 Home Point Capital are associated (or correlated) with Rocket Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Companies has no effect on the direction of Home Point i.e., Home Point and Rocket Companies go up and down completely randomly.

Pair Corralation between Home Point and Rocket Companies

If you would invest  1,050  in Rocket Companies on December 27, 2024 and sell it today you would earn a total of  272.00  from holding Rocket Companies or generate 25.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Home Point Capital  vs.  Rocket Companies

Home Point Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Point Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Home Point is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Rocket Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Companies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Rocket Companies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Home Point and Rocket Companies

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

The idea behind Home Point Capital and Rocket Companies 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.