Correlation Between Air Products and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both Air Products 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 Air Products and Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Rivian Automotive, you can compare the effects of market volatilities on Air Products 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 Air Products with a short position of Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Rivian Automotive.
Diversification Opportunities for Air Products and Rivian Automotive
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Rivian is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Air Products 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 Air Products and 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 Air Products i.e., Air Products and Rivian Automotive go up and down completely randomly.
Pair Corralation between Air Products and Rivian Automotive
Considering the 90-day investment horizon Air Products and is expected to generate 0.38 times more return on investment than Rivian Automotive. However, Air Products and is 2.65 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 -0.02 per unit of risk. If you would invest 26,409 in Air Products and on September 12, 2024 and sell it today you would earn a total of 4,827 from holding Air Products and or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products and vs. Rivian Automotive
Performance |
| Timeline |
| Air Products |
| Rivian Automotive |
Air Products and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Rivian Automotive
The main advantage of trading using opposite Air Products and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products 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.| Air Products vs. Griffon | Air Products vs. Merck Company | Air Products vs. Brinker International | Air Products vs. Alcoa Corp |
| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Li Auto | Rivian Automotive vs. Polestar Automotive Holding |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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