Correlation Between 04686JAE1 and Rivian Automotive

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Can any of the company-specific risk be diversified away by investing in both 04686JAE1 and Rivian Automotive 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 04686JAE1 and Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATH 345 15 MAY 52 and Rivian Automotive, you can compare the effects of market volatilities on 04686JAE1 and Rivian Automotive 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 04686JAE1 with a short position of Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of 04686JAE1 and Rivian Automotive.

Diversification Opportunities for 04686JAE1 and Rivian Automotive

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between 04686JAE1 and Rivian is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding ATH 345 15 MAY 52 and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and 04686JAE1 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 ATH 345 15 MAY 52 are associated (or correlated) with Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of 04686JAE1 i.e., 04686JAE1 and Rivian Automotive go up and down completely randomly.

Pair Corralation between 04686JAE1 and Rivian Automotive

Assuming the 90 days trading horizon 04686JAE1 is expected to generate 7.67 times less return on investment than Rivian Automotive. But when comparing it to its historical volatility, ATH 345 15 MAY 52 is 3.3 times less risky than Rivian Automotive. It trades about 0.06 of its potential returns per unit of risk. Rivian Automotive is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,029  in Rivian Automotive on September 5, 2024 and sell it today you would earn a total of  159.00  from holding Rivian Automotive or generate 15.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy72.73%
ValuesDaily Returns

ATH 345 15 MAY 52  vs.  Rivian Automotive

 Performance 
       Timeline  
ATH 345 15 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days ATH 345 15 MAY 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 04686JAE1 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Rivian Automotive 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Rivian Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

04686JAE1 and Rivian Automotive Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 04686JAE1 and Rivian Automotive

The main advantage of trading using opposite 04686JAE1 and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 04686JAE1 position performs unexpectedly, Rivian Automotive 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 Rivian Automotive will offset losses from the drop in Rivian Automotive's long position.
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The idea behind ATH 345 15 MAY 52 and Rivian Automotive 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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