Correlation Between Faraday Future and Autoliv

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

Diversification Opportunities for Faraday Future and Autoliv

-0.8

Correlation Coefficient

Faraday Future  Autoliv

Pay attention - limited upside

The 3 months correlation between Faraday and Autoliv is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv 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 Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of Faraday Future i.e., Faraday Future and Autoliv go up and down completely randomly.

Pair Corralation between Faraday Future and Autoliv

Given the investment horizon of 90 days Faraday Future Intelligent is expected to under-perform the Autoliv. In addition to that, Faraday Future is 5.43 times more volatile than Autoliv. It trades about -0.34 of its total potential returns per unit of risk. Autoliv is currently generating about 0.07 per unit of volatility. If you would invest  11,850  in Autoliv on February 3, 2024 and sell it today you would earn a total of  288.00  from holding Autoliv or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Faraday Future Intelligent  vs.  Autoliv

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 June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Autoliv

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Autoliv may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Faraday Future and Autoliv

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

The idea behind Faraday Future Intelligent and Autoliv 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.