Correlation Between Rivian Automotive and Gentex

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

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

Diversification Opportunities for Rivian Automotive and Gentex

0.19

Correlation Coefficient

Rivian Automotive  Gentex

Average diversification

The 3 months correlation between Rivian and Gentex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Gentex go up and down completely randomly.

Pair Corralation between Rivian Automotive and Gentex

Given the investment horizon of 90 days Rivian Automotive is expected to generate 4.14 times more return on investment than Gentex. However, Rivian Automotive is 4.14 times more volatile than Gentex. It trades about 0.2 of its potential returns per unit of risk. Gentex is currently generating about -0.27 per unit of risk. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rivian Automotive  vs.  Gentex

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.

Gentex

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rivian Automotive and Gentex

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

The idea behind Rivian Automotive and Gentex 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.