Correlation Between Rivian Automotive and Lordstown Motors
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Lordstown Motors 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 Lordstown Motors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Lordstown Motors Corp, you can compare the effects of market volatilities on Rivian Automotive and Lordstown Motors 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 Lordstown Motors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Lordstown Motors.
Diversification Opportunities for Rivian Automotive and Lordstown Motors
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Rivian and Lordstown is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Lordstown Motors Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lordstown Motors Corp 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 Lordstown Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lordstown Motors Corp has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Lordstown Motors go up and down completely randomly.
Pair Corralation between Rivian Automotive and Lordstown Motors
Given the investment horizon of 90 days Rivian Automotive is expected to generate 0.56 times more return on investment than Lordstown Motors. However, Rivian Automotive is 1.8 times less risky than Lordstown Motors. It trades about 0.01 of its potential returns per unit of risk. Lordstown Motors Corp is currently generating about -0.15 per unit of risk. If you would invest 1,885 in Rivian Automotive on November 1, 2024 and sell it today you would lose (624.00) from holding Rivian Automotive or give up 33.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 22.67% |
| Values | Daily Returns |
Rivian Automotive vs. Lordstown Motors Corp
Performance |
| Timeline |
| Rivian Automotive |
| Lordstown Motors Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Rivian Automotive and Lordstown Motors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Lordstown Motors
The main advantage of trading using opposite Rivian Automotive and Lordstown Motors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Lordstown Motors 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 Lordstown Motors will offset losses from the drop in Lordstown Motors' long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
| Lordstown Motors vs. Workhorse Group | Lordstown Motors vs. Canoo Inc | Lordstown Motors vs. Hyliion Holdings Corp | Lordstown Motors vs. Blink Charging Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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