Correlation Between Faraday Future and Honda
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Honda 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 Honda 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 Honda Motor Co, you can compare the effects of market volatilities on Faraday Future and Honda 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 Honda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Honda.
Diversification Opportunities for Faraday Future and Honda
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and Honda is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Honda Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honda Motor 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 Honda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honda Motor has no effect on the direction of Faraday Future i.e., Faraday Future and Honda go up and down completely randomly.
Pair Corralation between Faraday Future and Honda
Assuming the 90 days horizon Faraday Future is expected to generate 6.76 times less return on investment than Honda. But when comparing it to its historical volatility, Faraday Future Intelligent is 2.8 times less risky than Honda. It trades about 0.05 of its potential returns per unit of risk. Honda Motor Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 723.00 in Honda Motor Co on November 2, 2024 and sell it today you would earn a total of 217.00 from holding Honda Motor Co or generate 30.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.03% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Honda Motor Co
Performance |
| Timeline |
| Faraday Future Intel |
| Honda Motor |
Faraday Future and Honda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Honda
The main advantage of trading using opposite Faraday Future and Honda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Honda 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 Honda will offset losses from the drop in Honda'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 |
| Honda vs. Bayerische Motoren Werke | Honda vs. Volkswagen AG VZO | Honda vs. Volkswagen AG | Honda 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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