Correlation Between Faraday Future and Xos Equity
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Xos Equity 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 Xos Equity 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 Xos Equity Warrants, you can compare the effects of market volatilities on Faraday Future and Xos Equity 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 Xos Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Xos Equity.
Diversification Opportunities for Faraday Future and Xos Equity
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Faraday and Xos is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants 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 Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Faraday Future i.e., Faraday Future and Xos Equity go up and down completely randomly.
Pair Corralation between Faraday Future and Xos Equity
Assuming the 90 days horizon Faraday Future Intelligent is expected to generate 0.67 times more return on investment than Xos Equity. However, Faraday Future Intelligent is 1.49 times less risky than Xos Equity. It trades about -0.03 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about -0.23 per unit of risk. If you would invest 2.51 in Faraday Future Intelligent on August 31, 2024 and sell it today you would lose (0.50) from holding Faraday Future Intelligent or give up 19.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Faraday Future Intelligent vs. Xos Equity Warrants
Performance |
| Timeline |
| Faraday Future Intel |
| Xos Equity Warrants |
Faraday Future and Xos Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Faraday Future and Xos Equity
The main advantage of trading using opposite Faraday Future and Xos Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Xos Equity 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 Xos Equity will offset losses from the drop in Xos Equity's long position.| Faraday Future vs. Tesla Inc | Faraday Future vs. Li Auto | Faraday Future vs. Rivian Automotive | Faraday Future vs. Lucid Group |
| Xos Equity vs. Gentex | Xos Equity vs. Adient PLC | Xos Equity vs. Autoliv | Xos Equity vs. Fox Factory Holding |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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