Correlation Between Canoo and Faraday Future
Can any of the company-specific risk be diversified away by investing in both Canoo and Faraday Future 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 Canoo and Faraday Future into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canoo Inc and Faraday Future Intelligent, you can compare the effects of market volatilities on Canoo and Faraday Future 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 Canoo with a short position of Faraday Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canoo and Faraday Future.
Diversification Opportunities for Canoo and Faraday Future
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canoo and Faraday is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Canoo Inc and Faraday Future Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Faraday Future Intel and Canoo 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 Canoo Inc are associated (or correlated) with Faraday Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Faraday Future Intel has no effect on the direction of Canoo i.e., Canoo and Faraday Future go up and down completely randomly.
Pair Corralation between Canoo and Faraday Future
Given the investment horizon of 90 days Canoo Inc is expected to under-perform the Faraday Future. But the stock apears to be less risky and, when comparing its historical volatility, Canoo Inc is 3.14 times less risky than Faraday Future. The stock trades about -0.07 of its potential returns per unit of risk. The Faraday Future Intelligent is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 192,960 in Faraday Future Intelligent on August 28, 2024 and sell it today you would lose (192,818) from holding Faraday Future Intelligent or give up 99.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canoo Inc vs. Faraday Future Intelligent
Performance |
| Timeline |
| Canoo Inc |
| Faraday Future Intel |
Canoo and Faraday Future Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canoo and Faraday Future
The main advantage of trading using opposite Canoo and Faraday Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canoo position performs unexpectedly, Faraday Future 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 Faraday Future will offset losses from the drop in Faraday Future's long position.| Canoo vs. Lucid Group | Canoo vs. Rivian Automotive | Canoo vs. Polestar Automotive Holding | Canoo vs. Mullen Automotive |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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