Correlation Between Faraday Future and LiveWire

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

Diversification Opportunities for Faraday Future and LiveWire

-0.32

Correlation Coefficient

Faraday Future  LiveWire

Very good diversification

The 3 months correlation between Faraday and LiveWire is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and LiveWire Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveWire Group 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 LiveWire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveWire Group has no effect on the direction of Faraday Future i.e., Faraday Future and LiveWire go up and down completely randomly.

Pair Corralation between Faraday Future and LiveWire

Assuming the 90 days horizon Faraday Future Intelligent is expected to generate 2.94 times more return on investment than LiveWire. However, Faraday Future is 2.94 times more volatile than LiveWire Group. It trades about 0.01 of its potential returns per unit of risk. LiveWire Group is currently generating about -0.24 per unit of risk. If you would invest  6.45  in Faraday Future Intelligent on December 30, 2024 and sell it today you would lose (2.06) from holding Faraday Future Intelligent or give up 31.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.81%
Values	Daily Returns

Faraday Future Intelligent  vs.  LiveWire Group

Faraday Future Intel

Risk-Adjusted Performance

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 fairly abnormal technical and fundamental indicators, Faraday Future may actually be approaching a critical reversion point that can send shares even higher in April 2025.

LiveWire Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days LiveWire Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Faraday Future and LiveWire

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

The idea behind Faraday Future Intelligent and LiveWire Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.