Correlation Between Figs and Open Lending

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

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

Diversification Opportunities for Figs and Open Lending

-0.29

Correlation Coefficient

Figs  Open Lending

Very good diversification

The 3 months correlation between Figs and Open is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Figs Inc and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp 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 Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of Figs i.e., Figs and Open Lending go up and down completely randomly.

Pair Corralation between Figs and Open Lending

Given the investment horizon of 90 days Figs is expected to generate 2.2 times less return on investment than Open Lending. In addition to that, Figs is 1.41 times more volatile than Open Lending Corp. It trades about 0.02 of its total potential returns per unit of risk. Open Lending Corp is currently generating about 0.07 per unit of volatility. If you would invest  549.00  in Open Lending Corp on September 12, 2024 and sell it today you would earn a total of  63.00  from holding Open Lending Corp or generate 11.48% return on investment over 90 days.

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

Figs Inc  vs.  Open Lending Corp

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.

Open Lending Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Figs and Open Lending

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

The idea behind Figs Inc and Open Lending Corp 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.