Correlation Between Rivian Automotive and Aeye
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Aeye 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 Aeye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Aeye Inc, you can compare the effects of market volatilities on Rivian Automotive and Aeye 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 Aeye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Aeye.
Diversification Opportunities for Rivian Automotive and Aeye
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rivian and Aeye is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Aeye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeye Inc 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 Aeye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeye Inc has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Aeye go up and down completely randomly.
Pair Corralation between Rivian Automotive and Aeye
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.22 times more return on investment than Aeye. However, Rivian Automotive is 1.22 times more volatile than Aeye Inc. It trades about 0.03 of its potential returns per unit of risk. Aeye Inc is currently generating about -0.14 per unit of risk. If you would invest 1,016 in Rivian Automotive on August 24, 2024 and sell it today you would earn a total of 8.00 from holding Rivian Automotive or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. Aeye Inc
Performance |
| Timeline |
| Rivian Automotive |
| Aeye Inc |
Rivian Automotive and Aeye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Aeye
The main advantage of trading using opposite Rivian Automotive and Aeye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Aeye 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 Aeye will offset losses from the drop in Aeye's long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
| Aeye vs. Innoviz Technologies | Aeye vs. Luminar Technologies | Aeye vs. Hesai Group American | Aeye vs. Mobileye Global Class |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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