Correlation Between Rivian Automotive and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Niagara Mohawk 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 Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Niagara Mohawk Power, you can compare the effects of market volatilities on Rivian Automotive and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Niagara Mohawk.
Diversification Opportunities for Rivian Automotive and Niagara Mohawk
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rivian and Niagara is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Niagara Mohawk go up and down completely randomly.
Pair Corralation between Rivian Automotive and Niagara Mohawk
Given the investment horizon of 90 days Rivian Automotive is expected to under-perform the Niagara Mohawk. In addition to that, Rivian Automotive is 5.65 times more volatile than Niagara Mohawk Power. It trades about -0.05 of its total potential returns per unit of risk. Niagara Mohawk Power is currently generating about 0.18 per unit of volatility. If you would invest 5,700 in Niagara Mohawk Power on August 29, 2024 and sell it today you would earn a total of 500.00 from holding Niagara Mohawk Power or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Rivian Automotive vs. Niagara Mohawk Power
Performance |
| Timeline |
| Rivian Automotive |
| Niagara Mohawk Power |
Rivian Automotive and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Niagara Mohawk
The main advantage of trading using opposite Rivian Automotive and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk's long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
| Niagara Mohawk vs. Scholastic | Niagara Mohawk vs. CVR Partners LP | Niagara Mohawk vs. NL Industries | Niagara Mohawk vs. Avient Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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