Correlation Between Universal Music and Figs

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

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

Diversification Opportunities for Universal Music and Figs

0.71

Correlation Coefficient

Universal Music  Figs

Poor diversification

The 3 months correlation between Universal and Figs is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Figs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figs Inc and Universal Music 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 Universal Music Group 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 Universal Music i.e., Universal Music and Figs go up and down completely randomly.

Pair Corralation between Universal Music and Figs

Assuming the 90 days horizon Universal Music Group is expected to under-perform the Figs. But the pink sheet apears to be less risky and, when comparing its historical volatility, Universal Music Group is 2.37 times less risky than Figs. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Figs Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  519.00  in Figs Inc on September 12, 2024 and sell it today you would lose (6.00) from holding Figs Inc or give up 1.16% of portfolio value over 90 days.

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

Universal Music Group  vs.  Figs Inc

Universal Music Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Music Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Universal Music is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 uncertain technical and fundamental indicators, Figs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Universal Music and Figs

The main advantage of trading using opposite Universal Music and Figs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music 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 Universal Music Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.