Correlation Between Security National and Rocket Companies

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

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

Diversification Opportunities for Security National and Rocket Companies

0.41

Correlation Coefficient

Security National  Rocket Companies

Very weak diversification

The 3 months correlation between Security and Rocket is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Security National Financial and Rocket Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Companies and Security National 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 Security National Financial 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 Security National i.e., Security National and Rocket Companies go up and down completely randomly.

Pair Corralation between Security National and Rocket Companies

Assuming the 90 days horizon Security National is expected to generate 5.54 times less return on investment than Rocket Companies. But when comparing it to its historical volatility, Security National Financial is 2.28 times less risky than Rocket Companies. It trades about 0.05 of its potential returns per unit of risk. Rocket Companies is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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	Weak
Accuracy	100.0%
Values	Daily Returns

Security National Financial  vs.  Rocket Companies

Security National

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Security National Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Security National is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 Security National and Rocket Companies

The main advantage of trading using opposite Security National and Rocket Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security National 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 Security National Financial 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.