Correlation Between Aeye and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both Aeye 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 Aeye and Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeye Inc and Rivian Automotive, you can compare the effects of market volatilities on Aeye 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 Aeye with a short position of Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeye and Rivian Automotive.
Diversification Opportunities for Aeye and Rivian Automotive
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Aeye and Rivian is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aeye Inc and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Aeye 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 Aeye Inc 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 Aeye i.e., Aeye and Rivian Automotive go up and down completely randomly.
Pair Corralation between Aeye and Rivian Automotive
Given the investment horizon of 90 days Aeye Inc is expected to under-perform the Rivian Automotive. In addition to that, Aeye is 2.11 times more volatile than Rivian Automotive. It trades about -0.02 of its total potential returns per unit of risk. Rivian Automotive is currently generating about 0.01 per unit of volatility. If you would invest 1,640 in Rivian Automotive on August 28, 2024 and sell it today you would lose (485.00) from holding Rivian Automotive or give up 29.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeye Inc vs. Rivian Automotive
Performance |
| Timeline |
| Aeye Inc |
| Rivian Automotive |
Aeye and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeye and Rivian Automotive
The main advantage of trading using opposite Aeye and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeye 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.| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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