Correlation Between Rocket Lab and Intuitive Machines

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

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

Diversification Opportunities for Rocket Lab and Intuitive Machines

0.81

Correlation Coefficient

Rocket Lab  Intuitive Machines

Very poor diversification

The 3 months correlation between Rocket and Intuitive is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Lab USA and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines and Rocket Lab 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 Lab USA are associated (or correlated) with Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Rocket Lab i.e., Rocket Lab and Intuitive Machines go up and down completely randomly.

Pair Corralation between Rocket Lab and Intuitive Machines

Given the investment horizon of 90 days Rocket Lab USA is expected to generate 0.66 times more return on investment than Intuitive Machines. However, Rocket Lab USA is 1.52 times less risky than Intuitive Machines. It trades about -0.03 of its potential returns per unit of risk. Intuitive Machines is currently generating about -0.11 per unit of risk. 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

Rocket Lab USA  vs.  Intuitive Machines

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.

Intuitive Machines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Rocket Lab and Intuitive Machines

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

The idea behind Rocket Lab USA and Intuitive Machines 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.