Correlation Between Rocket Companies and Greystone Housing

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

By analyzing existing cross correlation between Rocket Companies and Greystone Housing Impact, you can compare the effects of market volatilities on Rocket Companies and Greystone Housing 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 Greystone Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Companies and Greystone Housing.

Diversification Opportunities for Rocket Companies and Greystone Housing

0.79

Correlation Coefficient

Rocket Companies  Greystone Housing

Poor diversification

The 3 months correlation between Rocket and Greystone is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Greystone Housing Impact in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greystone Housing Impact 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 Greystone Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greystone Housing Impact has no effect on the direction of Rocket Companies i.e., Rocket Companies and Greystone Housing go up and down completely randomly.

Pair Corralation between Rocket Companies and Greystone Housing

Considering the 90-day investment horizon Rocket Companies is expected to generate 2.05 times more return on investment than Greystone Housing. However, Rocket Companies is 2.05 times more volatile than Greystone Housing Impact. It trades about 0.11 of its potential returns per unit of risk. Greystone Housing Impact is currently generating about 0.18 per unit of risk. If you would invest  1,044  in Rocket Companies on December 29, 2024 and sell it today you would earn a total of  259.00  from holding Rocket Companies or generate 24.81% return on investment over 90 days.

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

Rocket Companies  vs.  Greystone Housing Impact

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.

Greystone Housing Impact

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greystone Housing Impact are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Greystone Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rocket Companies and Greystone Housing

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

The idea behind Rocket Companies and Greystone Housing Impact 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..