Correlation Between Faraday Future and Xos Equity

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

Diversification Opportunities for Faraday Future and Xos Equity

0.54

Correlation Coefficient

Faraday Future  Xos Equity

Very weak diversification

The 3 months correlation between Faraday and Xos is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants 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 Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Faraday Future i.e., Faraday Future and Xos Equity go up and down completely randomly.

Pair Corralation between Faraday Future and Xos Equity

Assuming the 90 days horizon Faraday Future Intelligent is expected to under-perform the Xos Equity. But the stock apears to be less risky and, when comparing its historical volatility, Faraday Future Intelligent is 11.11 times less risky than Xos Equity. The stock trades about 0.0 of its potential returns per unit of risk. The Xos Equity Warrants is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.66  in Xos Equity Warrants on August 30, 2024 and sell it today you would lose (3.08) from holding Xos Equity Warrants or give up 84.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Faraday Future Intelligent  vs.  Xos Equity Warrants

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 fairly stable technical and fundamental indicators, Faraday Future is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Xos Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Faraday Future and Xos Equity

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

The idea behind Faraday Future Intelligent and Xos Equity Warrants 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 CEOs Directory module to screen CEOs from public companies around the world.