Correlation Between Faraday Future and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Volkswagen 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 Volkswagen 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 Volkswagen AG VZO, you can compare the effects of market volatilities on Faraday Future and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Volkswagen.
Diversification Opportunities for Faraday Future and Volkswagen
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Faraday and Volkswagen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Volkswagen AG VZO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG VZO 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG VZO has no effect on the direction of Faraday Future i.e., Faraday Future and Volkswagen go up and down completely randomly.
Pair Corralation between Faraday Future and Volkswagen
Assuming the 90 days horizon Faraday Future Intelligent is expected to generate 6.53 times more return on investment than Volkswagen. However, Faraday Future is 6.53 times more volatile than Volkswagen AG VZO. It trades about 0.05 of its potential returns per unit of risk. Volkswagen AG VZO 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 | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Volkswagen AG VZO
Performance |
| Timeline |
| Faraday Future Intel |
| Volkswagen AG VZO |
Faraday Future and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Volkswagen
The main advantage of trading using opposite Faraday Future and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen'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 |
| Volkswagen vs. Volkswagen AG Pref | Volkswagen vs. Mercedes Benz Group AG | Volkswagen vs. Bayerische Motoren Werke | Volkswagen vs. Honda Motor Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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