Correlation Between Dlocal and Figs

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

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

Diversification Opportunities for Dlocal and Figs

-0.58

Correlation Coefficient

Dlocal  Figs

Excellent diversification

The 3 months correlation between Dlocal and Figs is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dlocal and Figs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figs Inc and Dlocal 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 Dlocal are associated (or correlated) with Figs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Figs Inc has no effect on the direction of Dlocal i.e., Dlocal and Figs go up and down completely randomly.

Pair Corralation between Dlocal and Figs

Considering the 90-day investment horizon Dlocal is expected to generate 0.92 times more return on investment than Figs. However, Dlocal is 1.09 times less risky than Figs. It trades about 0.0 of its potential returns per unit of risk. Figs Inc is currently generating about 0.0 per unit of risk. If you would invest  1,690  in Dlocal on September 29, 2024 and sell it today you would lose (540.00) from holding Dlocal or give up 31.95% of portfolio value over 90 days.

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

Dlocal  vs.  Figs Inc

Dlocal

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dlocal are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting essential indicators, Dlocal displayed solid returns over the last few months and may actually be approaching a breakup point.

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 comparatively stable technical and fundamental indicators, Figs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dlocal and Figs

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

The idea behind Dlocal and Figs Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.