Correlation Between Rivian Automotive and Minerals Technologies

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

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

Diversification Opportunities for Rivian Automotive and Minerals Technologies

-0.41

Correlation Coefficient

Rivian Automotive  Minerals Technologies

Very good diversification

The 3 months correlation between Rivian and Minerals is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Minerals Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerals Technologies 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 Minerals Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerals Technologies has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Minerals Technologies go up and down completely randomly.

Pair Corralation between Rivian Automotive and Minerals Technologies

Given the investment horizon of 90 days Rivian Automotive is expected to generate 5.42 times more return on investment than Minerals Technologies. However, Rivian Automotive is 5.42 times more volatile than Minerals Technologies. It trades about 0.06 of its potential returns per unit of risk. Minerals Technologies is currently generating about 0.01 per unit of risk. If you would invest  1,375  in Rivian Automotive on October 23, 2024 and sell it today you would earn a total of  46.00  from holding Rivian Automotive or generate 3.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Rivian Automotive  vs.  Minerals Technologies

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.

Minerals Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Rivian Automotive and Minerals Technologies

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

The idea behind Rivian Automotive and Minerals Technologies 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.