Correlation Between Lordstown Motors and Faraday Future

Can any of the company-specific risk be diversified away by investing in both Lordstown Motors and Faraday Future 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 Lordstown Motors and Faraday Future into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lordstown Motors Corp and Faraday Future Intelligent, you can compare the effects of market volatilities on Lordstown Motors and Faraday Future 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 Lordstown Motors with a short position of Faraday Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lordstown Motors and Faraday Future.

Diversification Opportunities for Lordstown Motors and Faraday Future

0.93

Correlation Coefficient

Lordstown Motors  Faraday Future

Almost no diversification

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

Pair Corralation between Lordstown Motors and Faraday Future

If you would invest  295.00  in Lordstown Motors Corp on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Lordstown Motors Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	1.56%
Values	Daily Returns

Lordstown Motors Corp  vs.  Faraday Future Intelligent

Lordstown Motors Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lordstown Motors Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Lordstown Motors is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Lordstown Motors and Faraday Future

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

The idea behind Lordstown Motors Corp and Faraday Future Intelligent 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.