Correlation Between Intuitive Machines and Rocket Lab

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

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

Diversification Opportunities for Intuitive Machines and Rocket Lab

0.92

Correlation Coefficient

Intuitive Machines  Rocket Lab

Almost no diversification

The 3 months correlation between Intuitive and Rocket is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines 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 Intuitive Machines 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 Intuitive Machines 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 Intuitive Machines i.e., Intuitive Machines and Rocket Lab go up and down completely randomly.

Pair Corralation between Intuitive Machines and Rocket Lab

Given the investment horizon of 90 days Intuitive Machines is expected to under-perform the Rocket Lab. In addition to that, Intuitive Machines is 1.43 times more volatile than Rocket Lab USA. It trades about -0.11 of its total potential returns per unit of risk. Rocket Lab USA is currently generating about -0.06 per unit of volatility. If you would invest  2,632  in Rocket Lab USA on December 30, 2024 and sell it today you would lose (770.00) from holding Rocket Lab USA or give up 29.26% of portfolio value over 90 days.

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

Intuitive Machines  vs.  Rocket Lab USA

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.

Rocket Lab USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rocket Lab USA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Intuitive Machines and Rocket Lab

The main advantage of trading using opposite Intuitive Machines and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuitive Machines 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.

The idea behind Intuitive Machines and Rocket Lab USA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.