Correlation Between Rivian Automotive and 70082LAB3

Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and 70082LAB3 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 70082LAB3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rivian Automotive and US70082LAB36, you can compare the effects of market volatilities on Rivian Automotive and 70082LAB3 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 70082LAB3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and 70082LAB3.

Diversification Opportunities for Rivian Automotive and 70082LAB3

0.48

Correlation Coefficient

Rivian Automotive  70082LAB3

Very weak diversification

The 3 months correlation between Rivian and 70082LAB3 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and US70082LAB36 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US70082LAB36 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 70082LAB3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US70082LAB36 has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and 70082LAB3 go up and down completely randomly.

Pair Corralation between Rivian Automotive and 70082LAB3

Given the investment horizon of 90 days Rivian Automotive is expected to generate 6.63 times more return on investment than 70082LAB3. However, Rivian Automotive is 6.63 times more volatile than US70082LAB36. It trades about 0.02 of its potential returns per unit of risk. US70082LAB36 is currently generating about -0.19 per unit of risk. If you would invest  1,187  in Rivian Automotive on December 1, 2024 and sell it today you would lose (3.00) from holding Rivian Automotive or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.67%
Values	Daily Returns

Rivian Automotive  vs.  US70082LAB36

Rivian Automotive

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Rivian Automotive may actually be approaching a critical reversion point that can send shares even higher in April 2025.

US70082LAB36

Risk-Adjusted Performance

Very Weak

Over the last 90 days US70082LAB36 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for US70082LAB36 investors.

Pair Trading with Rivian Automotive and 70082LAB3

The main advantage of trading using opposite Rivian Automotive and 70082LAB3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, 70082LAB3 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 70082LAB3 will offset losses from the drop in 70082LAB3's long position.

The idea behind Rivian Automotive and US70082LAB36 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..