Correlation Between Rivian Automotive and Century Aluminum
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Century Aluminum 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 Century Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Century Aluminum, you can compare the effects of market volatilities on Rivian Automotive and Century Aluminum 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 Century Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Century Aluminum.
Diversification Opportunities for Rivian Automotive and Century Aluminum
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rivian and Century is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Century Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Aluminum 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 Century Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Aluminum has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Century Aluminum go up and down completely randomly.
Pair Corralation between Rivian Automotive and Century Aluminum
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.23 times less return on investment than Century Aluminum. In addition to that, Rivian Automotive is 1.2 times more volatile than Century Aluminum. It trades about 0.18 of its total potential returns per unit of risk. Century Aluminum is currently generating about 0.26 per unit of volatility. If you would invest 1,765 in Century Aluminum on September 1, 2024 and sell it today you would earn a total of 518.00 from holding Century Aluminum or generate 29.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. Century Aluminum
Performance |
| Timeline |
| Rivian Automotive |
| Century Aluminum |
Rivian Automotive and Century Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Century Aluminum
The main advantage of trading using opposite Rivian Automotive and Century Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Century Aluminum 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 Century Aluminum will offset losses from the drop in Century Aluminum's long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Li Auto |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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