Correlation Between Rivian Automotive and Titan Machinery

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

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

Diversification Opportunities for Rivian Automotive and Titan Machinery

-0.28

Correlation Coefficient

Rivian Automotive  Titan Machinery

Very good diversification

The 3 months correlation between Rivian and Titan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Titan Machinery go up and down completely randomly.

Pair Corralation between Rivian Automotive and Titan Machinery

Given the investment horizon of 90 days Rivian Automotive is expected to generate 3.22 times less return on investment than Titan Machinery. In addition to that, Rivian Automotive is 1.52 times more volatile than Titan Machinery. It trades about 0.02 of its total potential returns per unit of risk. Titan Machinery is currently generating about 0.09 per unit of volatility. If you would invest  1,288  in Titan Machinery on September 9, 2024 and sell it today you would earn a total of  210.00  from holding Titan Machinery or generate 16.3% return on investment over 90 days.

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

Rivian Automotive  vs.  Titan Machinery

Rivian Automotive

Risk-Adjusted Performance

1 of 100

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 healthy basic indicators, Rivian Automotive is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Titan Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Titan Machinery displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rivian Automotive and Titan Machinery

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

The idea behind Rivian Automotive and Titan Machinery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .