Correlation Between Scandinavian Tobacco and Faraday Future
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco 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 Scandinavian Tobacco and Faraday Future into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Faraday Future Intelligent, you can compare the effects of market volatilities on Scandinavian Tobacco 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 Scandinavian Tobacco with a short position of Faraday Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Faraday Future.
Diversification Opportunities for Scandinavian Tobacco and Faraday Future
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Faraday is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group 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 Scandinavian Tobacco i.e., Scandinavian Tobacco and Faraday Future go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Faraday Future
Assuming the 90 days horizon Scandinavian Tobacco is expected to generate 2.87 times less return on investment than Faraday Future. But when comparing it to its historical volatility, Scandinavian Tobacco Group is 1.75 times less risky than Faraday Future. It trades about 0.03 of its potential returns per unit of risk. Faraday Future Intelligent is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Insignificant |
| Accuracy | 68.56% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Faraday Future Intelligent
Performance |
| Timeline |
| Scandinavian Tobacco |
| Faraday Future Intel |
Scandinavian Tobacco and Faraday Future Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Faraday Future
The main advantage of trading using opposite Scandinavian Tobacco and Faraday Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco 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.| Scandinavian Tobacco vs. Pyxus International | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Greenlane Holdings |
| Faraday Future vs. HYZON Motors | Faraday Future vs. NextNav Warrant | Faraday Future vs. Inspira Technologies Oxy | Faraday Future vs. AppTech Payments Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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