Correlation Between Forge Global and Rocket Lab

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

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

Diversification Opportunities for Forge Global and Rocket Lab

0.71

Correlation Coefficient

Forge Global  Rocket Lab

Poor diversification

The 3 months correlation between Forge and Rocket is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Forge Global Holdings 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 Forge Global 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 Forge Global Holdings 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 Forge Global i.e., Forge Global and Rocket Lab go up and down completely randomly.

Pair Corralation between Forge Global and Rocket Lab

Given the investment horizon of 90 days Forge Global is expected to generate 1.23 times less return on investment than Rocket Lab. In addition to that, Forge Global is 1.15 times more volatile than Rocket Lab USA. It trades about 0.18 of its total potential returns per unit of risk. Rocket Lab USA is currently generating about 0.25 per unit of volatility. If you would invest  2,237  in Rocket Lab USA on May 6, 2025 and sell it today you would earn a total of  2,244  from holding Rocket Lab USA or generate 100.31% return on investment over 90 days.

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

Forge Global Holdings  vs.  Rocket Lab USA

Forge Global Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forge Global Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Forge Global exhibited solid returns over the last few months and may actually be approaching a breakup point.

Rocket Lab USA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Lab USA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Rocket Lab sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forge Global and Rocket Lab

The main advantage of trading using opposite Forge Global and Rocket Lab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forge Global 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 Forge Global Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.