Correlation Between Rivian Automotive and OFX Group

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

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

Diversification Opportunities for Rivian Automotive and OFX Group

-0.69

Correlation Coefficient

Rivian Automotive  OFX Group

Excellent diversification

The 3 months correlation between Rivian and OFX is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and OFX Group go up and down completely randomly.

Pair Corralation between Rivian Automotive and OFX Group

Given the investment horizon of 90 days Rivian Automotive is expected to generate 0.45 times more return on investment than OFX Group. However, Rivian Automotive is 2.21 times less risky than OFX Group. It trades about 0.1 of its potential returns per unit of risk. OFX Group Ltd is currently generating about 0.04 per unit of risk. If you would invest  1,171  in Rivian Automotive on September 20, 2024 and sell it today you would earn a total of  299.00  from holding Rivian Automotive or generate 25.53% return on investment over 90 days.

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

Rivian Automotive  vs.  OFX Group Ltd

Rivian Automotive

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 8 (%) 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.

OFX Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in OFX Group Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OFX Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rivian Automotive and OFX Group

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

The idea behind Rivian Automotive and OFX Group Ltd 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.