Correlation Between Faraday Future and EI Du

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

Diversification Opportunities for Faraday Future and EI Du

-0.43

Correlation Coefficient

Faraday Future  EI Du

Very good diversification

The 3 months correlation between Faraday and CTA-P-A is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and EI du Pont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EI du Pont 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 EI Du. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EI du Pont has no effect on the direction of Faraday Future i.e., Faraday Future and EI Du go up and down completely randomly.

Pair Corralation between Faraday Future and EI Du

Given the investment horizon of 90 days Faraday Future Intelligent is expected to generate 6.75 times more return on investment than EI Du. However, Faraday Future is 6.75 times more volatile than EI du Pont. It trades about 0.08 of its potential returns per unit of risk. EI du Pont is currently generating about -0.15 per unit of risk. If you would invest  248.00  in Faraday Future Intelligent on October 6, 2024 and sell it today you would earn a total of  70.00  from holding Faraday Future Intelligent or generate 28.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	67.74%
Values	Daily Returns

Faraday Future Intelligent  vs.  EI du Pont

Faraday Future Intel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Future Intelligent are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. 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.

EI du Pont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EI du Pont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Preferred Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Faraday Future and EI Du

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

The idea behind Faraday Future Intelligent and EI du Pont 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..