Correlation Between Rivian Automotive and Albertsons Companies

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

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

Diversification Opportunities for Rivian Automotive and Albertsons Companies

0.62

Correlation Coefficient

Rivian Automotive  Albertsons Companies

Poor diversification

The 3 months correlation between Rivian and Albertsons is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Rivian Automotive 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 Rivian Automotive are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Albertsons Companies go up and down completely randomly.

Pair Corralation between Rivian Automotive and Albertsons Companies

Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.66 times less return on investment than Albertsons Companies. In addition to that, Rivian Automotive is 3.93 times more volatile than Albertsons Companies. It trades about 0.02 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.12 per unit of volatility. If you would invest  1,894  in Albertsons Companies on October 10, 2024 and sell it today you would earn a total of  78.00  from holding Albertsons Companies or generate 4.12% return on investment over 90 days.

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

Rivian Automotive  vs.  Albertsons Companies

Rivian Automotive

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 9 (%) 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.

Albertsons Companies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating fundamental indicators, Albertsons Companies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Rivian Automotive and Albertsons Companies

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

The idea behind Rivian Automotive and Albertsons Companies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.