Correlation Between Rivian Automotive and Seek

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

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

Diversification Opportunities for Rivian Automotive and Seek

-0.77

Correlation Coefficient

Rivian Automotive  Seek

Pay attention - limited upside

The 3 months correlation between Rivian and Seek is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Seek Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seek Ltd ADR 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 Seek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seek Ltd ADR has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Seek go up and down completely randomly.

Pair Corralation between Rivian Automotive and Seek

Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the Seek. In addition to that, Rivian Automotive is 2.39 times more volatile than Seek Ltd ADR. It trades about 0.0 of its total potential returns per unit of risk. Seek Ltd ADR is currently generating about 0.1 per unit of volatility. If you would invest  3,056  in Seek Ltd ADR on September 1, 2024 and sell it today you would earn a total of  336.00  from holding Seek Ltd ADR or generate 10.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Rivian Automotive  vs.  Seek Ltd ADR

Rivian Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rivian Automotive is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Seek Ltd ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seek Ltd ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Seek may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Rivian Automotive and Seek

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

The idea behind Rivian Automotive and Seek Ltd ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.