Correlation Between Rivian Automotive and Aptiv PLC
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Aptiv PLC 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 Aptiv PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Aptiv PLC, you can compare the effects of market volatilities on Rivian Automotive and Aptiv PLC 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 Aptiv PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Aptiv PLC.
Diversification Opportunities for Rivian Automotive and Aptiv PLC
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Rivian and Aptiv is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Aptiv PLC go up and down completely randomly.
Pair Corralation between Rivian Automotive and Aptiv PLC
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.85 times more return on investment than Aptiv PLC. However, Rivian Automotive is 1.85 times more volatile than Aptiv PLC. It trades about -0.01 of its potential returns per unit of risk. Aptiv PLC is currently generating about -0.06 per unit of risk. If you would invest 1,964 in Rivian Automotive on September 4, 2024 and sell it today you would lose (777.00) from holding Rivian Automotive or give up 39.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. Aptiv PLC
Performance |
| Timeline |
| Rivian Automotive |
| Aptiv PLC |
Rivian Automotive and Aptiv PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Aptiv PLC
The main advantage of trading using opposite Rivian Automotive and Aptiv PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Aptiv PLC 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 Aptiv PLC will offset losses from the drop in Aptiv PLC's long position.| Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Lucid Group |
| Aptiv PLC vs. Ford Motor | Aptiv PLC vs. General Motors | Aptiv PLC vs. Goodyear Tire Rubber | Aptiv PLC vs. Li Auto |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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