Correlation Between Faraday Future and Ensysce Biosciences

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

Diversification Opportunities for Faraday Future and Ensysce Biosciences

0.11

Correlation Coefficient

Faraday Future  Ensysce Biosciences

Average diversification

The 3 months correlation between Faraday and Ensysce is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Ensysce Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensysce Biosciences 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 Ensysce Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensysce Biosciences has no effect on the direction of Faraday Future i.e., Faraday Future and Ensysce Biosciences go up and down completely randomly.

Pair Corralation between Faraday Future and Ensysce Biosciences

If you would invest  1.49  in Faraday Future Intelligent on September 22, 2024 and sell it today you would earn a total of  0.51  from holding Faraday Future Intelligent or generate 34.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Faraday Future Intelligent  vs.  Ensysce Biosciences

Faraday Future Intel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Faraday Future Intelligent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Faraday Future showed solid returns over the last few months and may actually be approaching a breakup point.

Ensysce Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ensysce Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Ensysce Biosciences is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Faraday Future and Ensysce Biosciences

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

The idea behind Faraday Future Intelligent and Ensysce Biosciences 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.