Correlation Between Faraday Future and AYRO
Can any of the company-specific risk be diversified away by investing in both Faraday Future and AYRO 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 Faraday Future and AYRO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Faraday Future Intelligent and AYRO Inc, you can compare the effects of market volatilities on Faraday Future and AYRO 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 Faraday Future with a short position of AYRO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and AYRO.
Diversification Opportunities for Faraday Future and AYRO
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Faraday and AYRO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and AYRO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYRO Inc and Faraday Future 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 Faraday Future Intelligent are associated (or correlated) with AYRO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYRO Inc has no effect on the direction of Faraday Future i.e., Faraday Future and AYRO go up and down completely randomly.
Pair Corralation between Faraday Future and AYRO
Given the investment horizon of 90 days Faraday Future Intelligent is expected to generate 8.05 times more return on investment than AYRO. However, Faraday Future is 8.05 times more volatile than AYRO Inc. It trades about 0.04 of its potential returns per unit of risk. AYRO Inc is currently generating about -0.08 per unit of risk. If you would invest 1,994 in Faraday Future Intelligent on November 9, 2024 and sell it today you would lose (1,861) from holding Faraday Future Intelligent or give up 93.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Future Intelligent vs. AYRO Inc
Performance |
| Timeline |
| Faraday Future Intel |
| AYRO Inc |
Faraday Future and AYRO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and AYRO
The main advantage of trading using opposite Faraday Future and AYRO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, AYRO 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 AYRO will offset losses from the drop in AYRO's long position.The idea behind Faraday Future Intelligent and AYRO 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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