Correlation Between Rivian Automotive and First Watch
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and First Watch 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 First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and First Watch Restaurant, you can compare the effects of market volatilities on Rivian Automotive and First Watch 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 First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and First Watch.
Diversification Opportunities for Rivian Automotive and First Watch
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rivian and First is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and First Watch Restaurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Watch Restaurant 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 First Watch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Watch Restaurant has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and First Watch go up and down completely randomly.
Pair Corralation between Rivian Automotive and First Watch
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.45 times more return on investment than First Watch. However, Rivian Automotive is 1.45 times more volatile than First Watch Restaurant. It trades about 0.14 of its potential returns per unit of risk. First Watch Restaurant is currently generating about 0.12 per unit of risk. If you would invest 1,029 in Rivian Automotive on September 4, 2024 and sell it today you would earn a total of 158.00 from holding Rivian Automotive or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. First Watch Restaurant
Performance |
| Timeline |
| Rivian Automotive |
| First Watch Restaurant |
Rivian Automotive and First Watch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and First Watch
The main advantage of trading using opposite Rivian Automotive and First Watch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, First Watch 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 First Watch will offset losses from the drop in First Watch's long position.| Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Lucid Group | Rivian Automotive vs. Honda Motor Co |
| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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