Correlation Between Figs and Smith Nephew

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

By analyzing existing cross correlation between Figs Inc and Smith Nephew SNATS, you can compare the effects of market volatilities on Figs and Smith Nephew 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 Smith Nephew. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figs and Smith Nephew.

Diversification Opportunities for Figs and Smith Nephew

0.85

Correlation Coefficient

Figs  Smith Nephew

Very poor diversification

The 3 months correlation between Figs and Smith is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS 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 Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Figs i.e., Figs and Smith Nephew go up and down completely randomly.

Pair Corralation between Figs and Smith Nephew

Given the investment horizon of 90 days Figs Inc is expected to generate 1.83 times more return on investment than Smith Nephew. However, Figs is 1.83 times more volatile than Smith Nephew SNATS. It trades about 0.19 of its potential returns per unit of risk. Smith Nephew SNATS is currently generating about 0.01 per unit of risk. If you would invest  533.00  in Figs Inc on April 16, 2025 and sell it today you would earn a total of  54.00  from holding Figs Inc or generate 10.13% return on investment over 90 days.

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

Figs Inc  vs.  Smith Nephew SNATS

Figs Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Figs Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Figs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Smith Nephew SNATS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smith Nephew SNATS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Smith Nephew displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Figs and Smith Nephew

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

The idea behind Figs Inc and Smith Nephew SNATS 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.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.