Correlation Between Faraday Future and Modine Manufacturing
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Modine Manufacturing 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 Modine Manufacturing 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 Modine Manufacturing, you can compare the effects of market volatilities on Faraday Future and Modine Manufacturing 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 Modine Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Modine Manufacturing.
Diversification Opportunities for Faraday Future and Modine Manufacturing
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Faraday and Modine is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Modine Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modine Manufacturing 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 Modine Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modine Manufacturing has no effect on the direction of Faraday Future i.e., Faraday Future and Modine Manufacturing go up and down completely randomly.
Pair Corralation between Faraday Future and Modine Manufacturing
Given the investment horizon of 90 days Faraday Future is expected to generate 10.53 times less return on investment than Modine Manufacturing. In addition to that, Faraday Future is 6.56 times more volatile than Modine Manufacturing. It trades about 0.0 of its total potential returns per unit of risk. Modine Manufacturing is currently generating about 0.13 per unit of volatility. If you would invest 2,053 in Modine Manufacturing on August 24, 2024 and sell it today you would earn a total of 11,996 from holding Modine Manufacturing or generate 584.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Modine Manufacturing
Performance |
| Timeline |
| Faraday Future Intel |
| Modine Manufacturing |
Faraday Future and Modine Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Modine Manufacturing
The main advantage of trading using opposite Faraday Future and Modine Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Modine Manufacturing 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 Modine Manufacturing will offset losses from the drop in Modine Manufacturing's long position.| Faraday Future vs. Lucid Group | Faraday Future vs. Rivian Automotive | Faraday Future vs. Polestar Automotive Holding | Faraday Future vs. Mullen Automotive |
| Modine Manufacturing vs. Cooper Stnd | Modine Manufacturing vs. Motorcar Parts of | Modine Manufacturing vs. American Axle Manufacturing | Modine Manufacturing vs. Stoneridge |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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