Correlation Between Faraday Future and AEye
Can any of the company-specific risk be diversified away by investing in both Faraday Future and AEye 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 AEye 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 AEye Inc, you can compare the effects of market volatilities on Faraday Future and AEye 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 AEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and AEye.
Diversification Opportunities for Faraday Future and AEye
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Faraday and AEye is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and AEye Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEye 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 AEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEye Inc has no effect on the direction of Faraday Future i.e., Faraday Future and AEye go up and down completely randomly.
Pair Corralation between Faraday Future and AEye
Assuming the 90 days horizon Faraday Future Intelligent is expected to under-perform the AEye. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Future Intelligent is 2.01 times less risky than AEye. The stock trades about -0.36 of its potential returns per unit of risk. The AEye Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8.20 in AEye Inc on November 3, 2024 and sell it today you would lose (0.50) from holding AEye Inc or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Future Intelligent vs. AEye Inc
Performance |
| Timeline |
| Faraday Future Intel |
| AEye Inc |
Faraday Future and AEye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and AEye
The main advantage of trading using opposite Faraday Future and AEye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, AEye 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 AEye will offset losses from the drop in AEye'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 |
| AEye vs. Faraday Future Intelligent | AEye vs. Innoviz Technologies | AEye vs. Aeye Inc | AEye vs. Xos Equity Warrants |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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