Correlation Between Faraday Future and Polestar Automotive
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Polestar 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 Faraday Future and Polestar Automotive 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 Polestar Automotive Holding, you can compare the effects of market volatilities on Faraday Future and Polestar 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 Faraday Future with a short position of Polestar Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Polestar Automotive.
Diversification Opportunities for Faraday Future and Polestar Automotive
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Faraday and Polestar is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Polestar Automotive Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polestar Automotive 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 Polestar Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polestar Automotive has no effect on the direction of Faraday Future i.e., Faraday Future and Polestar Automotive go up and down completely randomly.
Pair Corralation between Faraday Future and Polestar Automotive
Given the investment horizon of 90 days Faraday Future Intelligent is expected to under-perform the Polestar Automotive. In addition to that, Faraday Future is 1.59 times more volatile than Polestar Automotive Holding. It trades about -0.2 of its total potential returns per unit of risk. Polestar Automotive Holding is currently generating about 0.09 per unit of volatility. If you would invest 95.00 in Polestar Automotive Holding on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Polestar Automotive Holding or generate 26.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Polestar Automotive Holding
Performance |
| Timeline |
| Faraday Future Intel |
| Polestar Automotive |
Faraday Future and Polestar Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Polestar Automotive
The main advantage of trading using opposite Faraday Future and Polestar Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Polestar 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 Polestar Automotive will offset losses from the drop in Polestar Automotive's long position.| Faraday Future vs. Nio Class A | Faraday Future vs. Lucid Group | Faraday Future vs. Tesla Inc | Faraday Future vs. Mullen Automotive |
| Polestar Automotive vs. Lucid Group | Polestar Automotive vs. Rivian Automotive | Polestar Automotive vs. Canoo Inc | Polestar Automotive vs. Nio Class A |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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