Correlation Between Rivian Automotive and Wabash National

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

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

Diversification Opportunities for Rivian Automotive and Wabash National

0.41

Correlation Coefficient

Rivian Automotive  Wabash National

Very weak diversification

The 3 months correlation between Rivian and Wabash is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Wabash National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wabash National 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 Wabash National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wabash National has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Wabash National go up and down completely randomly.

Pair Corralation between Rivian Automotive and Wabash National

Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the Wabash National. In addition to that, Rivian Automotive is 2.08 times more volatile than Wabash National. It trades about -0.02 of its total potential returns per unit of risk. Wabash National is currently generating about 0.07 per unit of volatility. If you would invest  1,857  in Wabash National on September 6, 2024 and sell it today you would earn a total of  154.00  from holding Wabash National or generate 8.29% return on investment over 90 days.

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

Rivian Automotive  vs.  Wabash National

Rivian Automotive

Risk-Adjusted Performance

0 of 100

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

Wabash National

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wabash National are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Wabash National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rivian Automotive and Wabash National

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

The idea behind Rivian Automotive and Wabash National 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..