Correlation Between Rivian Automotive and Luminar Technologies
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Luminar Technologies 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 Luminar Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Luminar Technologies, you can compare the effects of market volatilities on Rivian Automotive and Luminar Technologies 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 Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Luminar Technologies.
Diversification Opportunities for Rivian Automotive and Luminar Technologies
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rivian and Luminar is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies 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 Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Luminar Technologies go up and down completely randomly.
Pair Corralation between Rivian Automotive and Luminar Technologies
Given the investment horizon of 90 days Rivian Automotive is expected to generate 0.74 times more return on investment than Luminar Technologies. However, Rivian Automotive is 1.35 times less risky than Luminar Technologies. It trades about 0.02 of its potential returns per unit of risk. Luminar Technologies is currently generating about -0.06 per unit of risk. If you would invest 1,481 in Rivian Automotive on November 27, 2024 and sell it today you would lose (184.00) from holding Rivian Automotive or give up 12.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Rivian Automotive vs. Luminar Technologies
Performance |
Timeline |
Rivian Automotive |
Luminar Technologies |
Rivian Automotive and Luminar Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rivian Automotive and Luminar Technologies
The main advantage of trading using opposite Rivian Automotive and Luminar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Luminar Technologies 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 Luminar Technologies will offset losses from the drop in Luminar Technologies' long position.Rivian Automotive vs. Nio Class A | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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