Correlation Between Rivian Automotive and Fisker

Can any of the company-specific risk be diversified away by investing in both Rivian Automotive and Fisker 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 Fisker into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rivian Automotive and Fisker Inc, you can compare the effects of market volatilities on Rivian Automotive and Fisker 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 Fisker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rivian Automotive and Fisker.

Diversification Opportunities for Rivian Automotive and Fisker

0.87

Correlation Coefficient

Rivian Automotive  Fisker

Very poor diversification

The 3 months correlation between Rivian and Fisker is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Rivian Automotive and Fisker Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisker 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 Fisker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisker Inc has no effect on the direction of Rivian Automotive i.e., Rivian Automotive and Fisker go up and down completely randomly.

Pair Corralation between Rivian Automotive and Fisker

Given the investment horizon of 90 days Rivian Automotive is expected to generate 0.55 times more return on investment than Fisker. However, Rivian Automotive is 1.81 times less risky than Fisker. It trades about -0.02 of its potential returns per unit of risk. Fisker Inc is currently generating about -0.14 per unit of risk. If you would invest  2,729  in Rivian Automotive on February 7, 2024 and sell it today you would lose (1,696) from holding Rivian Automotive or give up 62.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.75%
Values	Daily Returns

Rivian Automotive  vs.  Fisker Inc

Rivian Automotive

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fisker Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fisker Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Rivian Automotive and Fisker

The main advantage of trading using opposite Rivian Automotive and Fisker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rivian Automotive position performs unexpectedly, Fisker 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 Fisker will offset losses from the drop in Fisker's long position.

The idea behind Rivian Automotive and Fisker Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.