Correlation Between Faraday Future and Loyalty Ventures

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

Diversification Opportunities for Faraday Future and Loyalty Ventures

0.68

Correlation Coefficient

Faraday Future  Loyalty Ventures

Poor diversification

The 3 months correlation between Faraday and Loyalty is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures 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 Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of Faraday Future i.e., Faraday Future and Loyalty Ventures go up and down completely randomly.

Pair Corralation between Faraday Future and Loyalty Ventures

Given the investment horizon of 90 days Faraday Future Intelligent is expected to generate 0.62 times more return on investment than Loyalty Ventures. However, Faraday Future Intelligent is 1.61 times less risky than Loyalty Ventures. It trades about 0.0 of its potential returns per unit of risk. Loyalty Ventures is currently generating about -0.16 per unit of risk. If you would invest  408,000  in Faraday Future Intelligent on October 5, 2024 and sell it today you would lose (407,674) from holding Faraday Future Intelligent or give up 99.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	5.49%
Values	Daily Returns

Faraday Future Intelligent  vs.  Loyalty Ventures

Faraday Future Intel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Future Intelligent are ranked lower than 7 (%) 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.

Loyalty Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loyalty Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Loyalty Ventures is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Faraday Future and Loyalty Ventures

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

The idea behind Faraday Future Intelligent and Loyalty Ventures 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.