Correlation Between Pono Capital and Rivian Automotive

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

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

Diversification Opportunities for Pono Capital and Rivian Automotive

0.33

Correlation Coefficient

Pono Capital  Rivian Automotive

Weak diversification

The 3 months correlation between Pono and Rivian is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pono Capital Two and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Pono Capital 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 Pono Capital Two 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 Pono Capital i.e., Pono Capital and Rivian Automotive go up and down completely randomly.

Pair Corralation between Pono Capital and Rivian Automotive

If you would invest  1,160  in Rivian Automotive on September 24, 2024 and sell it today you would earn a total of  215.00  from holding Rivian Automotive or generate 18.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Pono Capital Two  vs.  Rivian Automotive

Pono Capital Two

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pono Capital Two has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pono Capital is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Rivian Automotive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Rivian Automotive displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pono Capital and Rivian Automotive

The main advantage of trading using opposite Pono Capital and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pono Capital 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 Pono Capital Two 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.