Correlation Between Nio and Faraday Future

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

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

Diversification Opportunities for Nio and Faraday Future

-0.8

Correlation Coefficient

Nio  Faraday Future

Pay attention - limited upside

The 3 months correlation between Nio and Faraday is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A 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 Nio 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 Nio Class A 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 Nio i.e., Nio and Faraday Future go up and down completely randomly.

Pair Corralation between Nio and Faraday Future

Considering the 90-day investment horizon Nio Class A is expected to generate 0.76 times more return on investment than Faraday Future. However, Nio Class A is 1.31 times less risky than Faraday Future. It trades about -0.07 of its potential returns per unit of risk. Faraday Future Intelligent is currently generating about -0.15 per unit of risk. If you would invest  737.00  in Nio Class A on July 20, 2025 and sell it today you would lose (62.00) from holding Nio Class A or give up 8.41% of portfolio value over 90 days.

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

Nio Class A  vs.  Faraday Future Intelligent

Nio Class A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nio Class A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal forward indicators, Nio displayed solid returns over the last few months and may actually be approaching a breakup point.

Faraday Future Intel

Risk-Adjusted Performance

Weakest

Over the last 90 days Faraday Future Intelligent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in November 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nio and Faraday Future

The main advantage of trading using opposite Nio and Faraday Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio 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 Nio Class A 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.