Correlation Between Faraday Future and Hyzon Motors

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

Diversification Opportunities for Faraday Future and Hyzon Motors

0.93

Correlation Coefficient

Faraday Future  Hyzon Motors

Almost no diversification

The 3 months correlation between Faraday and Hyzon is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Hyzon Motors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyzon Motors 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 Hyzon Motors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyzon Motors has no effect on the direction of Faraday Future i.e., Faraday Future and Hyzon Motors go up and down completely randomly.

Pair Corralation between Faraday Future and Hyzon Motors

Given the investment horizon of 90 days Faraday Future Intelligent is expected to under-perform the Hyzon Motors. In addition to that, Faraday Future is 1.21 times more volatile than Hyzon Motors. It trades about -0.16 of its total potential returns per unit of risk. Hyzon Motors is currently generating about -0.1 per unit of volatility. If you would invest  310.00  in Hyzon Motors on September 3, 2024 and sell it today you would lose (143.00) from holding Hyzon Motors or give up 46.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Faraday Future Intelligent  vs.  Hyzon Motors

Faraday Future Intel

Risk-Adjusted Performance

0 of 100

Very Weak

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 weak performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hyzon Motors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyzon Motors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Faraday Future and Hyzon Motors

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

The idea behind Faraday Future Intelligent and Hyzon Motors 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.