Correlation Between Falcons Beyond and Hyliion Holdings

Can any of the company-specific risk be diversified away by investing in both Falcons Beyond and Hyliion Holdings 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 Falcons Beyond and Hyliion Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcons Beyond Global, and Hyliion Holdings Corp, you can compare the effects of market volatilities on Falcons Beyond and Hyliion Holdings 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 Falcons Beyond with a short position of Hyliion Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcons Beyond and Hyliion Holdings.

Diversification Opportunities for Falcons Beyond and Hyliion Holdings

-0.51

Correlation Coefficient

Falcons Beyond  Hyliion Holdings

Excellent diversification

The 3 months correlation between Falcons and Hyliion is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Falcons Beyond Global, and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion Holdings Corp and Falcons Beyond 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 Falcons Beyond Global, are associated (or correlated) with Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of Falcons Beyond i.e., Falcons Beyond and Hyliion Holdings go up and down completely randomly.

Pair Corralation between Falcons Beyond and Hyliion Holdings

Assuming the 90 days horizon Falcons Beyond Global, is expected to generate 2.1 times more return on investment than Hyliion Holdings. However, Falcons Beyond is 2.1 times more volatile than Hyliion Holdings Corp. It trades about 0.1 of its potential returns per unit of risk. Hyliion Holdings Corp is currently generating about 0.0 per unit of risk. If you would invest  100.00  in Falcons Beyond Global, on September 19, 2024 and sell it today you would earn a total of  10.00  from holding Falcons Beyond Global, or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Falcons Beyond Global,  vs.  Hyliion Holdings Corp

Falcons Beyond Global,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Falcons Beyond Global, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Falcons Beyond showed solid returns over the last few months and may actually be approaching a breakup point.

Hyliion Holdings Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyliion Holdings Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Hyliion Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falcons Beyond and Hyliion Holdings

The main advantage of trading using opposite Falcons Beyond and Hyliion Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcons Beyond position performs unexpectedly, Hyliion Holdings 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 Hyliion Holdings will offset losses from the drop in Hyliion Holdings' long position.

The idea behind Falcons Beyond Global, and Hyliion Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.