Correlation Between Rocket Companies and Home Point

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

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

Diversification Opportunities for Rocket Companies and Home Point

-0.68

Correlation Coefficient

Rocket Companies  Home Point

Excellent diversification

The 3 months correlation between Rocket and Home is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Companies and Home Point Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Point Capital 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 Home Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Point Capital has no effect on the direction of Rocket Companies i.e., Rocket Companies and Home Point go up and down completely randomly.

Pair Corralation between Rocket Companies and Home Point

If you would invest  231.00  in Home Point Capital on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Home Point Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Rocket Companies  vs.  Home Point Capital

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.

Home Point Capital

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Rocket Companies and Home Point

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

The idea behind Rocket Companies and Home Point Capital 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.