Correlation Between Rivian Automotive and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Shake Shack 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 Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Shake Shack, you can compare the effects of market volatilities on Rivian Automotive and Shake Shack 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 Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Shake Shack.
Diversification Opportunities for Rivian Automotive and Shake Shack
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rivian and Shake is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack 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 Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Shake Shack go up and down completely randomly.
Pair Corralation between Rivian Automotive and Shake Shack
Given the investment horizon of 90 days Rivian Automotive is expected to generate 2.62 times more return on investment than Shake Shack. However, Rivian Automotive is 2.62 times more volatile than Shake Shack. It trades about 0.14 of its potential returns per unit of risk. Shake Shack is currently generating about 0.17 per unit of risk. If you would invest 1,029 in Rivian Automotive on September 4, 2024 and sell it today you would earn a total of 158.00 from holding Rivian Automotive or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. Shake Shack
Performance |
| Timeline |
| Rivian Automotive |
| Shake Shack |
Rivian Automotive and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Shake Shack
The main advantage of trading using opposite Rivian Automotive and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack's long position.| Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Lucid Group | Rivian Automotive vs. Honda Motor Co |
| Shake Shack vs. Hyatt Hotels | Shake Shack vs. Smart Share Global | Shake Shack vs. Sweetgreen | Shake Shack vs. Wyndham Hotels Resorts |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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