Correlation Between Rivian Automotive and Cars
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Cars 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 Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Cars Inc, you can compare the effects of market volatilities on Rivian Automotive and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Cars.
Diversification Opportunities for Rivian Automotive and Cars
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rivian and Cars is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Cars go up and down completely randomly.
Pair Corralation between Rivian Automotive and Cars
Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the Cars. In addition to that, Rivian Automotive is 2.23 times more volatile than Cars Inc. It trades about -0.02 of its total potential returns per unit of risk. Cars Inc is currently generating about 0.02 per unit of volatility. If you would invest 1,935 in Cars Inc on September 6, 2024 and sell it today you would earn a total of 75.00 from holding Cars Inc or generate 3.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rivian Automotive vs. Cars Inc
Performance |
Timeline |
Rivian Automotive |
Cars Inc |
Rivian Automotive and Cars Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rivian Automotive and Cars
The main advantage of trading using opposite Rivian Automotive and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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