Correlation Between Faraday Future and Nio Inc

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Faraday Future and Nio Inc 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 Nio Inc 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 Nio Inc ADR, you can compare the effects of market volatilities on Faraday Future and Nio Inc 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 Nio Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Faraday Future and Nio Inc.

Diversification Opportunities for Faraday Future and Nio Inc

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Faraday and Nio Inc is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Faraday Future Intelligent and Nio Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Inc ADR 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 Nio Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Inc ADR has no effect on the direction of Faraday Future i.e., Faraday Future and Nio Inc go up and down completely randomly.

Pair Corralation between Faraday Future and Nio Inc

Given the investment horizon of 90 days Faraday Future Intelligent is expected to under-perform the Nio Inc. In addition to that, Faraday Future is 1.6 times more volatile than Nio Inc ADR. It trades about -0.22 of its total potential returns per unit of risk. Nio Inc ADR is currently generating about -0.08 per unit of volatility. If you would invest  1,773  in Nio Inc ADR on July 4, 2022 and sell it today you would lose (196.00)  from holding Nio Inc ADR or give up 11.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Faraday Future Intelligent  vs.  Nio Inc ADR

 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

Nio Inc ADR 
Nio Inc Performance
0 of 100
Over the last 90 days Nio Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in November 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nio Inc Price Channel

Faraday Future and Nio Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Faraday Future and Nio Inc

The main advantage of trading using opposite Faraday Future and Nio Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Faraday Future position performs unexpectedly, Nio Inc 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 Nio Inc will offset losses from the drop in Nio Inc's long position.
Faraday Future vs. Amazon Inc
The idea behind Faraday Future Intelligent and Nio Inc ADR 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.
Nio Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
CEO Directory
Screen CEOs from public companies around the world
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Bond Directory
Find actively traded corporate debentures issued by US companies
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go