Correlation Between Rivian Automotive and BOEING

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Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and BOEING 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 BOEING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rivian Automotive and BOEING CO, you can compare the effects of market volatilities on Rivian Automotive and BOEING 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 BOEING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and BOEING.

Diversification Opportunities for Rivian Automotive and BOEING

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Rivian and BOEING is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and BOEING CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOEING CO 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 BOEING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOEING CO has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and BOEING go up and down completely randomly.

Pair Corralation between Rivian Automotive and BOEING

Given the investment horizon of 90 days Rivian Automotive is expected to generate 6.96 times more return on investment than BOEING. However, Rivian Automotive is 6.96 times more volatile than BOEING CO. It trades about 0.07 of its potential returns per unit of risk. BOEING CO is currently generating about 0.16 per unit of risk. If you would invest  1,086  in Rivian Automotive on August 29, 2024 and sell it today you would earn a total of  69.00  from holding Rivian Automotive or generate 6.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy91.3%
ValuesDaily Returns

Rivian Automotive  vs.  BOEING CO

 Performance 
       Timeline  
Rivian Automotive 

Risk-Adjusted Performance

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Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.
BOEING CO 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in BOEING CO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BOEING is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Rivian Automotive and BOEING Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rivian Automotive and BOEING

The main advantage of trading using opposite Rivian Automotive and BOEING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, BOEING 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 BOEING will offset losses from the drop in BOEING's long position.
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The idea behind Rivian Automotive and BOEING CO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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