Correlation Between Figs and Vista Outdoor

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

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

Diversification Opportunities for Figs and Vista Outdoor

0.14

Correlation Coefficient

Figs  Vista Outdoor

Average diversification

The 3 months correlation between Figs and Vista is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor 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 Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of Figs i.e., Figs and Vista Outdoor go up and down completely randomly.

Pair Corralation between Figs and Vista Outdoor

Given the investment horizon of 90 days Figs is expected to generate 4.03 times less return on investment than Vista Outdoor. In addition to that, Figs is 1.76 times more volatile than Vista Outdoor. It trades about 0.01 of its total potential returns per unit of risk. Vista Outdoor is currently generating about 0.06 per unit of volatility. If you would invest  2,722  in Vista Outdoor on October 3, 2024 and sell it today you would earn a total of  1,741  from holding Vista Outdoor or generate 63.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.56%
Values	Daily Returns

Figs Inc  vs.  Vista Outdoor

Figs Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Figs Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Vista Outdoor

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Vista Outdoor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Figs and Vista Outdoor

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

The idea behind Figs Inc and Vista Outdoor 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.