Correlation Between Rocket Companies and Federal Natl

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

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

Diversification Opportunities for Rocket Companies and Federal Natl

-0.89

Correlation Coefficient

Rocket Companies  Federal Natl

Pay attention - limited upside

The 3 months correlation between Rocket and Federal is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Federal Natl Pfd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Natl Pfd and Rocket Companies 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 Companies are associated (or correlated) with Federal Natl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Natl Pfd has no effect on the direction of Rocket Companies i.e., Rocket Companies and Federal Natl go up and down completely randomly.

Pair Corralation between Rocket Companies and Federal Natl

Considering the 90-day investment horizon Rocket Companies is expected to under-perform the Federal Natl. But the stock apears to be less risky and, when comparing its historical volatility, Rocket Companies is 3.72 times less risky than Federal Natl. The stock trades about -0.29 of its potential returns per unit of risk. The Federal Natl Pfd is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  673.00  in Federal Natl Pfd on September 15, 2024 and sell it today you would earn a total of  1,028  from holding Federal Natl Pfd or generate 152.75% return on investment over 90 days.

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

Rocket Companies  vs.  Federal Natl Pfd

Rocket Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rocket Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Federal Natl Pfd

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Natl Pfd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Federal Natl disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocket Companies and Federal Natl

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

The idea behind Rocket Companies and Federal Natl Pfd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.