Correlation Between Figs and KLA Tencor

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

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

Diversification Opportunities for Figs and KLA Tencor

0.6

Correlation Coefficient

Figs  KLA Tencor

Poor diversification

The 3 months correlation between Figs and KLA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Figs i.e., Figs and KLA Tencor go up and down completely randomly.

Pair Corralation between Figs and KLA Tencor

Given the investment horizon of 90 days Figs Inc is expected to generate 1.7 times more return on investment than KLA Tencor. However, Figs is 1.7 times more volatile than KLA Tencor. It trades about 0.02 of its potential returns per unit of risk. KLA Tencor is currently generating about -0.06 per unit of risk. 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

Figs Inc  vs.  KLA Tencor

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.

KLA Tencor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLA Tencor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Figs and KLA Tencor

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

The idea behind Figs Inc and KLA Tencor 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.