Correlation Between Wabash National and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both Wabash National 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 Wabash National and Rivian Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wabash National and Rivian Automotive, you can compare the effects of market volatilities on Wabash National 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 Wabash National with a short position of Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wabash National and Rivian Automotive.
Diversification Opportunities for Wabash National and Rivian Automotive
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wabash and Rivian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Wabash National and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive and Wabash National 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 Wabash National 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 Wabash National i.e., Wabash National and Rivian Automotive go up and down completely randomly.
Pair Corralation between Wabash National and Rivian Automotive
Considering the 90-day investment horizon Wabash National is expected to generate 1.18 times less return on investment than Rivian Automotive. But when comparing it to its historical volatility, Wabash National is 2.64 times less risky than Rivian Automotive. It trades about 0.18 of its potential returns per unit of risk. Rivian Automotive is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,086 in Rivian Automotive on August 28, 2024 and sell it today you would earn a total of 74.00 from holding Rivian Automotive or generate 6.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wabash National vs. Rivian Automotive
Performance |
| Timeline |
| Wabash National |
| Rivian Automotive |
Wabash National and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wabash National and Rivian Automotive
The main advantage of trading using opposite Wabash National and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wabash National 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.| Wabash National vs. Rev Group | Wabash National vs. Gencor Industries | Wabash National vs. Alamo Group | Wabash National vs. Columbus McKinnon |
| Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Lucid Group | Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Mullen Automotive |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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