Correlation Between Xpeng and Faraday Future
Can any of the company-specific risk be diversified away by investing in both Xpeng 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 Xpeng and Faraday Future into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xpeng Inc and Faraday Future Intelligent, you can compare the effects of market volatilities on Xpeng 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 Xpeng with a short position of Faraday Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xpeng and Faraday Future.
Diversification Opportunities for Xpeng and Faraday Future
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Xpeng and Faraday is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Xpeng Inc 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 Xpeng 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 Xpeng Inc 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 Xpeng i.e., Xpeng and Faraday Future go up and down completely randomly.
Pair Corralation between Xpeng and Faraday Future
Given the investment horizon of 90 days Xpeng Inc is expected to generate 0.52 times more return on investment than Faraday Future. However, Xpeng Inc is 1.92 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 -0.35 per unit of risk. If you would invest 776.00 in Xpeng Inc on January 31, 2024 and sell it today you would earn a total of 34.00 from holding Xpeng Inc or generate 4.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Xpeng Inc vs. Faraday Future Intelligent
Performance |
Timeline |
Xpeng Inc |
Faraday Future Intel |
Xpeng and Faraday Future Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xpeng and Faraday Future
The main advantage of trading using opposite Xpeng and Faraday Future positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpeng 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 Xpeng Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |