Correlation Between Rivian Automotive and AerSale Corp

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

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

Diversification Opportunities for Rivian Automotive and AerSale Corp

0.49

Correlation Coefficient

Rivian Automotive  AerSale Corp

Very weak diversification

The 3 months correlation between Rivian and AerSale is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp 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 AerSale Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerSale Corp has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and AerSale Corp go up and down completely randomly.

Pair Corralation between Rivian Automotive and AerSale Corp

Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.47 times more return on investment than AerSale Corp. However, Rivian Automotive is 1.47 times more volatile than AerSale Corp. It trades about 0.01 of its potential returns per unit of risk. AerSale Corp is currently generating about -0.04 per unit of risk. If you would invest  1,734  in Rivian Automotive on September 24, 2024 and sell it today you would lose (338.00) from holding Rivian Automotive or give up 19.49% of portfolio value over 90 days.

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

Rivian Automotive  vs.  AerSale Corp

Rivian Automotive

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 5 (%) 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.

AerSale Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, AerSale Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rivian Automotive and AerSale Corp

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

The idea behind Rivian Automotive and AerSale Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.