Correlation Between Rivian Automotive and East Africa
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and East Africa 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 East Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and East Africa Metals, you can compare the effects of market volatilities on Rivian Automotive and East Africa 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 East Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and East Africa.
Diversification Opportunities for Rivian Automotive and East Africa
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rivian and East is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and East Africa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Africa Metals 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 East Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Africa Metals has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and East Africa go up and down completely randomly.
Pair Corralation between Rivian Automotive and East Africa
Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the East Africa. But the stock apears to be less risky and, when comparing its historical volatility, Rivian Automotive is 14.6 times less risky than East Africa. The stock trades about -0.01 of its potential returns per unit of risk. The East Africa Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7.91 in East Africa Metals on September 3, 2024 and sell it today you would earn a total of 3.09 from holding East Africa Metals or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Rivian Automotive vs. East Africa Metals
Performance |
| Timeline |
| Rivian Automotive |
| East Africa Metals |
Rivian Automotive and East Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and East Africa
The main advantage of trading using opposite Rivian Automotive and East Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, East Africa 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 East Africa will offset losses from the drop in East Africa's long position.| Rivian Automotive vs. GreenPower Motor | Rivian Automotive vs. ZEEKR Intelligent Technology | Rivian Automotive vs. Volcon Inc | Rivian Automotive vs. Ford Motor |
| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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