Correlation Between Figs and In Veritas
Can any of the company-specific risk be diversified away by investing in both Figs and In Veritas 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 In Veritas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Figs Inc and In Veritas Medical, you can compare the effects of market volatilities on Figs and In Veritas 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 In Veritas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Figs and In Veritas.
Diversification Opportunities for Figs and In Veritas
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Figs and IVME is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and In Veritas Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on In Veritas Medical 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 In Veritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of In Veritas Medical has no effect on the direction of Figs i.e., Figs and In Veritas go up and down completely randomly.
Pair Corralation between Figs and In Veritas
Given the investment horizon of 90 days Figs is expected to generate 85.51 times less return on investment than In Veritas. But when comparing it to its historical volatility, Figs Inc is 10.58 times less risky than In Veritas. It trades about 0.01 of its potential returns per unit of risk. In Veritas Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.29 in In Veritas Medical on September 3, 2024 and sell it today you would lose (0.28) from holding In Veritas Medical or give up 96.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Figs Inc vs. In Veritas Medical
Performance |
| Timeline |
| Figs Inc |
| In Veritas Medical |
Figs and In Veritas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Figs and In Veritas
The main advantage of trading using opposite Figs and In Veritas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Figs position performs unexpectedly, In Veritas 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 In Veritas will offset losses from the drop in In Veritas' long position.The idea behind Figs Inc and In Veritas Medical 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.| In Veritas vs. PVH Corp | In Veritas vs. Figs Inc | In Veritas vs. Nexstar Broadcasting Group | In Veritas vs. Nike Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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