Correlation Between Weyco and Rivian Automotive

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

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

Diversification Opportunities for Weyco and Rivian Automotive

-0.31

Correlation Coefficient

Weyco  Rivian Automotive

Very good diversification

The 3 months correlation between Weyco and Rivian is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Weyco 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 Weyco Group are associated (or correlated) with Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of Weyco i.e., Weyco and Rivian Automotive go up and down completely randomly.

Pair Corralation between Weyco and Rivian Automotive

Given the investment horizon of 90 days Weyco is expected to generate 2.27 times less return on investment than Rivian Automotive. But when comparing it to its historical volatility, Weyco Group is 1.72 times less risky than Rivian Automotive. It trades about 0.05 of its potential returns per unit of risk. Rivian Automotive is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,096  in Rivian Automotive on September 13, 2024 and sell it today you would earn a total of  300.00  from holding Rivian Automotive or generate 27.37% return on investment over 90 days.

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

Weyco Group  vs.  Rivian Automotive

Weyco Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Weyco is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Rivian Automotive

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rivian Automotive are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rivian Automotive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Weyco and Rivian Automotive

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

The idea behind Weyco Group and Rivian Automotive 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.