Correlation Between Rivian Automotive and Stoneridge
Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Stoneridge 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 Stoneridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and Stoneridge, you can compare the effects of market volatilities on Rivian Automotive and Stoneridge 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 Stoneridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Stoneridge.
Diversification Opportunities for Rivian Automotive and Stoneridge
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rivian and Stoneridge is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Stoneridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoneridge 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 Stoneridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoneridge has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Stoneridge go up and down completely randomly.
Pair Corralation between Rivian Automotive and Stoneridge
Given the investment horizon of 90 days Rivian Automotive is expected to generate 1.6 times more return on investment than Stoneridge. However, Rivian Automotive is 1.6 times more volatile than Stoneridge. It trades about -0.01 of its potential returns per unit of risk. Stoneridge is currently generating about -0.07 per unit of risk. If you would invest 2,729 in Rivian Automotive on August 30, 2024 and sell it today you would lose (1,507) from holding Rivian Automotive or give up 55.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rivian Automotive vs. Stoneridge
Performance |
| Timeline |
| Rivian Automotive |
| Stoneridge |
Rivian Automotive and Stoneridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rivian Automotive and Stoneridge
The main advantage of trading using opposite Rivian Automotive and Stoneridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Stoneridge 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 Stoneridge will offset losses from the drop in Stoneridge's long position.| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Xpeng Inc | Rivian Automotive vs. Mullen Automotive | Rivian Automotive vs. Tesla Inc |
| Stoneridge vs. Monro Muffler Brake | Stoneridge vs. Motorcar Parts of | Stoneridge vs. Standard Motor Products | Stoneridge vs. Douglas Dynamics |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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