Correlation Between Aston Martin and Rivian Automotive

Can any of the company-specific risk be diversified away by investing in both Aston Martin and Rivian Automotive 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 Aston Martin and Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aston Martin Lagonda and Rivian Automotive, you can compare the effects of market volatilities on Aston Martin and Rivian Automotive 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 Aston Martin with a short position of Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aston Martin and Rivian Automotive.

Diversification Opportunities for Aston Martin and Rivian Automotive

0.51

Correlation Coefficient

Aston Martin  Rivian Automotive

Very weak diversification

The 3 months correlation between Aston and Rivian is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aston Martin Lagonda and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Aston Martin 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 Aston Martin Lagonda are associated (or correlated) with Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Aston Martin i.e., Aston Martin and Rivian Automotive go up and down completely randomly.

Pair Corralation between Aston Martin and Rivian Automotive

Assuming the 90 days horizon Aston Martin Lagonda is expected to under-perform the Rivian Automotive. In addition to that, Aston Martin is 1.44 times more volatile than Rivian Automotive. It trades about -0.06 of its total potential returns per unit of risk. Rivian Automotive is currently generating about 0.03 per unit of volatility. If you would invest  1,372  in Rivian Automotive on September 12, 2024 and sell it today you would earn a total of  34.00  from holding Rivian Automotive or generate 2.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Aston Martin Lagonda  vs.  Rivian Automotive

Aston Martin Lagonda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Martin Lagonda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rivian Automotive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Rivian Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Aston Martin and Rivian Automotive

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

The idea behind Aston Martin Lagonda and Rivian Automotive 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .