Correlation Between Pool and Figs

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

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

Diversification Opportunities for Pool and Figs

0.09

Correlation Coefficient

Pool  Figs

Significant diversification

The 3 months correlation between Pool and Figs is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and Figs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figs Inc and Pool 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 Pool Corporation 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 Pool i.e., Pool and Figs go up and down completely randomly.

Pair Corralation between Pool and Figs

Given the investment horizon of 90 days Pool Corporation is expected to generate 0.4 times more return on investment than Figs. However, Pool Corporation is 2.49 times less risky than Figs. It trades about 0.08 of its potential returns per unit of risk. Figs Inc is currently generating about -0.01 per unit of risk. If you would invest  34,337  in Pool Corporation on September 4, 2024 and sell it today you would earn a total of  3,260  from holding Pool Corporation or generate 9.49% return on investment over 90 days.

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

Pool Corp.  vs.  Figs Inc

Pool

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Pool may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Pool and Figs

The main advantage of trading using opposite Pool and Figs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pool 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 Pool Corporation 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..