Correlation Between Faraday Future and Chewy

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

Diversification Opportunities for Faraday Future and Chewy

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Faraday and Chewy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Chewy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chewy Inc 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 Chewy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chewy Inc has no effect on the direction of Faraday Future i.e., Faraday Future and Chewy go up and down completely randomly.

Pair Corralation between Faraday Future and Chewy

Given the investment horizon of 90 days Faraday Future Intelligent is expected to under-perform the Chewy. In addition to that, Faraday Future is 1.66 times more volatile than Chewy Inc. It trades about -0.06 of its total potential returns per unit of risk. Chewy Inc is currently generating about -0.03 per unit of volatility. If you would invest  8,655  in Chewy Inc on July 7, 2022 and sell it today you would lose (4,988)  from holding Chewy Inc or give up 57.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Faraday Future Intelligent  vs.  Chewy Inc

 Performance (%) 
       Timeline  
Faraday Future Intel 
Faraday Performance
0 of 100
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 conflicting performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in November 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Faraday Price Channel

Chewy Inc 
Chewy Performance
0 of 100
Over the last 90 days Chewy Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Chewy Price Channel

Faraday Future and Chewy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Faraday Future and Chewy

The main advantage of trading using opposite Faraday Future and Chewy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Chewy 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 Chewy will offset losses from the drop in Chewy's long position.
Faraday Future vs. Amazon Inc
The idea behind Faraday Future Intelligent and Chewy Inc 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.
Chewy vs. Amazon Inc
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 CEO Directory module to screen CEOs from public companies around the world.

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