Correlation Between Volcon and Rivian Automotive

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

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

Diversification Opportunities for Volcon and Rivian Automotive

0.7

Correlation Coefficient

Volcon  Rivian Automotive

Poor diversification

The 3 months correlation between Volcon and Rivian is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Volcon Inc and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Volcon 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 Volcon Inc are associated (or correlated) with Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Volcon i.e., Volcon and Rivian Automotive go up and down completely randomly.

Pair Corralation between Volcon and Rivian Automotive

Given the investment horizon of 90 days Volcon Inc is expected to under-perform the Rivian Automotive. In addition to that, Volcon is 1.67 times more volatile than Rivian Automotive. It trades about -0.27 of its total potential returns per unit of risk. Rivian Automotive is currently generating about -0.01 per unit of volatility. If you would invest  1,358  in Rivian Automotive on December 28, 2024 and sell it today you would lose (117.00) from holding Rivian Automotive or give up 8.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Volcon Inc  vs.  Rivian Automotive

Volcon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volcon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Rivian Automotive

Risk-Adjusted Performance

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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Volcon and Rivian Automotive

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

The idea behind Volcon Inc and Rivian Automotive 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.