Correlation Between Figs and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Figs and Entravision Communications 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 Entravision Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Figs Inc and Entravision Communications, you can compare the effects of market volatilities on Figs and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figs and Entravision Communications.
Diversification Opportunities for Figs and Entravision Communications
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Figs and Entravision is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Figs i.e., Figs and Entravision Communications go up and down completely randomly.
Pair Corralation between Figs and Entravision Communications
Given the investment horizon of 90 days Figs Inc is expected to generate 1.05 times more return on investment than Entravision Communications. However, Figs is 1.05 times more volatile than Entravision Communications. It trades about 0.0 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of risk. If you would invest 779.00 in Figs Inc on August 28, 2024 and sell it today you would lose (281.00) from holding Figs Inc or give up 36.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Figs Inc vs. Entravision Communications
Performance |
| Timeline |
| Figs Inc |
| Entravision Communications |
Figs and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figs and Entravision Communications
The main advantage of trading using opposite Figs and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figs position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.The idea behind Figs Inc and Entravision Communications 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.| Entravision Communications vs. Marchex | Entravision Communications vs. Direct Digital Holdings | Entravision Communications vs. Cimpress NV | Entravision Communications vs. Townsquare Media |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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