Correlation Between Rivian Automotive and GreenPower
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and GreenPower 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 GreenPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and GreenPower Motor, you can compare the effects of market volatilities on Rivian Automotive and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and GreenPower.
Diversification Opportunities for Rivian Automotive and GreenPower
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rivian and GreenPower is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and GreenPower go up and down completely randomly.
Pair Corralation between Rivian Automotive and GreenPower
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.36 times more return on investment than GreenPower. However, Rivian Automotive is 1.36 times more volatile than GreenPower Motor. It trades about 0.15 of its potential returns per unit of risk. GreenPower Motor is currently generating about 0.02 per unit of risk. If you would invest 1,039 in Rivian Automotive on August 31, 2024 and sell it today you would earn a total of 183.00 from holding Rivian Automotive or generate 17.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. GreenPower Motor
Performance |
| Timeline |
| Rivian Automotive |
| GreenPower Motor |
Rivian Automotive and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and GreenPower
The main advantage of trading using opposite Rivian Automotive and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower's long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
| GreenPower vs. Phoenix Motor Common | GreenPower vs. Envirotech Vehicles | GreenPower vs. Volcon Inc | GreenPower vs. Zapp Electric Vehicles |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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