Correlation Between CPI Aerostructures and Rocket Lab

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

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

Diversification Opportunities for CPI Aerostructures and Rocket Lab

0.8

Correlation Coefficient

CPI Aerostructures  Rocket Lab

Very poor diversification

The 3 months correlation between CPI and Rocket is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CPI Aerostructures 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 CPI Aerostructures 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 CPI Aerostructures 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 CPI Aerostructures i.e., CPI Aerostructures and Rocket Lab go up and down completely randomly.

Pair Corralation between CPI Aerostructures and Rocket Lab

Considering the 90-day investment horizon CPI Aerostructures is expected to under-perform the Rocket Lab. But the stock apears to be less risky and, when comparing its historical volatility, CPI Aerostructures is 1.74 times less risky than Rocket Lab. The stock trades about -0.15 of its potential returns per unit of risk. The Rocket Lab USA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,838  in Rocket Lab USA on February 3, 2025 and sell it today you would lose (539.00) from holding Rocket Lab USA or give up 18.99% of portfolio value over 90 days.

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

CPI Aerostructures  vs.  Rocket Lab USA

CPI Aerostructures

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPI Aerostructures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 latest abnormal performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CPI Aerostructures and Rocket Lab

The main advantage of trading using opposite CPI Aerostructures and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Aerostructures 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 CPI Aerostructures 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.