Correlation Between Rivian Automotive and Dave Busters

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

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

Diversification Opportunities for Rivian Automotive and Dave Busters

-0.69

Correlation Coefficient

Rivian Automotive  Dave Busters

Excellent diversification

The 3 months correlation between Rivian and Dave is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Dave Busters Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Busters Enterta 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 Dave Busters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Busters Enterta has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Dave Busters go up and down completely randomly.

Pair Corralation between Rivian Automotive and Dave Busters

Given the investment horizon of 90 days Rivian Automotive is expected to generate 7.32 times less return on investment than Dave Busters. In addition to that, Rivian Automotive is 1.78 times more volatile than Dave Busters Entertainment. It trades about 0.01 of its total potential returns per unit of risk. Dave Busters Entertainment is currently generating about 0.16 per unit of volatility. If you would invest  2,549  in Dave Busters Entertainment on October 13, 2024 and sell it today you would earn a total of  284.00  from holding Dave Busters Entertainment or generate 11.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Rivian Automotive  vs.  Dave Busters Entertainment

Rivian Automotive

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 8 (%) 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.

Dave Busters Enterta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dave Busters Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Rivian Automotive and Dave Busters

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

The idea behind Rivian Automotive and Dave Busters Entertainment 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.