Correlation Between Rivian Automotive and Bausch

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

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

Diversification Opportunities for Rivian Automotive and Bausch

0.68

Correlation Coefficient

Rivian Automotive  Bausch

Poor diversification

The 3 months correlation between Rivian and Bausch is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Bausch Health Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bausch Health 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 Bausch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bausch Health Companies has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Bausch go up and down completely randomly.

Pair Corralation between Rivian Automotive and Bausch

Given the investment horizon of 90 days Rivian Automotive is expected to generate 0.92 times more return on investment than Bausch. However, Rivian Automotive is 1.09 times less risky than Bausch. It trades about 0.16 of its potential returns per unit of risk. Bausch Health Companies is currently generating about -0.13 per unit of risk. If you would invest  1,049  in Rivian Automotive on October 7, 2024 and sell it today you would earn a total of  600.00  from holding Rivian Automotive or generate 57.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	52.38%
Values	Daily Returns

Rivian Automotive  vs.  Bausch Health Companies

Rivian Automotive

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 12 (%) 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.

Bausch Health Companies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bausch Health Companies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for Bausch Health Companies investors.

Pair Trading with Rivian Automotive and Bausch

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

The idea behind Rivian Automotive and Bausch Health 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.