Correlation Between Faraday Future and Bayerische Motoren
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Bayerische Motoren 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 Bayerische Motoren 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 Bayerische Motoren Werke, you can compare the effects of market volatilities on Faraday Future and Bayerische Motoren 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 Bayerische Motoren. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Bayerische Motoren.
Diversification Opportunities for Faraday Future and Bayerische Motoren
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Faraday and Bayerische is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Bayerische Motoren Werke in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayerische Motoren Werke 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 Bayerische Motoren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayerische Motoren Werke has no effect on the direction of Faraday Future i.e., Faraday Future and Bayerische Motoren go up and down completely randomly.
Pair Corralation between Faraday Future and Bayerische Motoren
Assuming the 90 days horizon Faraday Future Intelligent is expected to generate 6.12 times more return on investment than Bayerische Motoren. However, Faraday Future is 6.12 times more volatile than Bayerische Motoren Werke. It trades about 0.05 of its potential returns per unit of risk. Bayerische Motoren Werke is currently generating about 0.01 per unit of risk. If you would invest 14.00 in Faraday Future Intelligent on November 2, 2024 and sell it today you would lose (10.01) from holding Faraday Future Intelligent or give up 71.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.2% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Bayerische Motoren Werke
Performance |
| Timeline |
| Faraday Future Intel |
| Bayerische Motoren Werke |
Faraday Future and Bayerische Motoren Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Bayerische Motoren
The main advantage of trading using opposite Faraday Future and Bayerische Motoren positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Bayerische Motoren 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 Bayerische Motoren will offset losses from the drop in Bayerische Motoren's long position.| Faraday Future vs. HYZON Motors | Faraday Future vs. NextNav Warrant | Faraday Future vs. Inspira Technologies Oxy | Faraday Future vs. AppTech Payments Corp |
| Bayerische Motoren vs. Honda Motor Co | Bayerische Motoren vs. Volkswagen AG VZO | Bayerische Motoren vs. Volkswagen AG | Bayerische Motoren vs. Bayerische Motoren Werke |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |