Correlation Between Faraday Future and Cisco Systems

Can any of the company-specific risk be diversified away by investing in both Faraday Future and Cisco Systems 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 Cisco Systems 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 Cisco Systems, you can compare the effects of market volatilities on Faraday Future and Cisco Systems 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 Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Cisco Systems.

Diversification Opportunities for Faraday Future and Cisco Systems

0.0

Correlation Coefficient

Faraday Future  Cisco Systems

Pay attention - limited upside

The 3 months correlation between Faraday and Cisco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems 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 Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Faraday Future i.e., Faraday Future and Cisco Systems go up and down completely randomly.

Pair Corralation between Faraday Future and Cisco Systems

Given the investment horizon of 90 days Faraday Future Intelligent is expected to generate 13.71 times more return on investment than Cisco Systems. However, Faraday Future is 13.71 times more volatile than Cisco Systems. It trades about 0.1 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.08 per unit of risk. If you would invest  110.00  in Faraday Future Intelligent on December 19, 2024 and sell it today you would earn a total of  35.00  from holding Faraday Future Intelligent or generate 31.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	88.33%
Values	Daily Returns

Faraday Future Intelligent  vs.  Cisco Systems

Faraday Future Intel

Risk-Adjusted Performance

OK

Over the last 90 days Faraday Future Intelligent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak forward indicators, Faraday Future exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cisco Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Faraday Future and Cisco Systems

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

The idea behind Faraday Future Intelligent and Cisco Systems 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.