Correlation Between Rivian Automotive and SNDL
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and SNDL 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 SNDL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and SNDL Inc, you can compare the effects of market volatilities on Rivian Automotive and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and SNDL.
Diversification Opportunities for Rivian Automotive and SNDL
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rivian and SNDL is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and SNDL go up and down completely randomly.
Pair Corralation between Rivian Automotive and SNDL
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.46 times more return on investment than SNDL. However, Rivian Automotive is 1.46 times more volatile than SNDL Inc. It trades about 0.18 of its potential returns per unit of risk. SNDL Inc is currently generating about -0.06 per unit of risk. If you would invest 1,010 in Rivian Automotive on September 1, 2024 and sell it today you would earn a total of 213.00 from holding Rivian Automotive or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. SNDL Inc
Performance |
| Timeline |
| Rivian Automotive |
| SNDL Inc |
Rivian Automotive and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and SNDL
The main advantage of trading using opposite Rivian Automotive and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL's long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Li Auto |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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