Correlation Between Figs and Leisure Portfolio

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

By analyzing existing cross correlation between Figs Inc and Leisure Portfolio Leisure, you can compare the effects of market volatilities on Figs and Leisure Portfolio 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 Figs with a short position of Leisure Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figs and Leisure Portfolio.

Diversification Opportunities for Figs and Leisure Portfolio

-0.42

Correlation Coefficient

Figs  Leisure Portfolio

Very good diversification

The 3 months correlation between Figs and Leisure is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Leisure Portfolio Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Portfolio Leisure and Figs 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 Figs Inc are associated (or correlated) with Leisure Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Portfolio Leisure has no effect on the direction of Figs i.e., Figs and Leisure Portfolio go up and down completely randomly.

Pair Corralation between Figs and Leisure Portfolio

Given the investment horizon of 90 days Figs Inc is expected to generate 3.11 times more return on investment than Leisure Portfolio. However, Figs is 3.11 times more volatile than Leisure Portfolio Leisure. It trades about 0.07 of its potential returns per unit of risk. Leisure Portfolio Leisure is currently generating about -0.1 per unit of risk. If you would invest  485.00  in Figs Inc on January 31, 2024 and sell it today you would earn a total of  18.00  from holding Figs Inc or generate 3.71% return on investment over 90 days.

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

Figs Inc  vs.  Leisure Portfolio Leisure

Figs Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Figs Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Leisure Portfolio Leisure

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Portfolio Leisure are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leisure Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Figs and Leisure Portfolio

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

The idea behind Figs Inc and Leisure Portfolio Leisure 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.