Correlation Between Tandy Leather and Figs

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

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

Diversification Opportunities for Tandy Leather and Figs

0.45

Correlation Coefficient

Tandy Leather  Figs

Very weak diversification

The 3 months correlation between Tandy and Figs is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Tandy Leather Factory and Figs Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Figs Inc and Tandy Leather 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 Tandy Leather Factory 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 Tandy Leather i.e., Tandy Leather and Figs go up and down completely randomly.

Pair Corralation between Tandy Leather and Figs

Considering the 90-day investment horizon Tandy Leather Factory is expected to under-perform the Figs. But the stock apears to be less risky and, when comparing its historical volatility, Tandy Leather Factory is 1.93 times less risky than Figs. The stock trades about 0.0 of its potential returns per unit of risk. The Figs Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  737.00  in Figs Inc on September 4, 2024 and sell it today you would lose (196.00) from holding Figs Inc or give up 26.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Tandy Leather Factory  vs.  Figs Inc

Tandy Leather Factory

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Tandy Leather and Figs

The main advantage of trading using opposite Tandy Leather and Figs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandy Leather 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 Tandy Leather Factory 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..