Correlation Between WisdomTree Investments and Fair Isaac

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

By analyzing existing cross correlation between WisdomTree Investments and Fair Isaac Corp, you can compare the effects of market volatilities on WisdomTree Investments and Fair Isaac 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 WisdomTree Investments with a short position of Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Investments and Fair Isaac.

Diversification Opportunities for WisdomTree Investments and Fair Isaac

0.87

Correlation Coefficient

WisdomTree Investments  Fair Isaac

Very poor diversification

The 3 months correlation between WisdomTree and Fair is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Investments and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp and WisdomTree Investments 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 WisdomTree Investments are associated (or correlated) with Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of WisdomTree Investments i.e., WisdomTree Investments and Fair Isaac go up and down completely randomly.

Pair Corralation between WisdomTree Investments and Fair Isaac

Assuming the 90 days horizon WisdomTree Investments is expected to under-perform the Fair Isaac. But the stock apears to be less risky and, when comparing its historical volatility, WisdomTree Investments is 1.72 times less risky than Fair Isaac. The stock trades about -0.38 of its potential returns per unit of risk. The Fair Isaac Corp is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  199,900  in Fair Isaac Corp on October 22, 2024 and sell it today you would lose (16,750) from holding Fair Isaac Corp or give up 8.38% of portfolio value over 90 days.

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

WisdomTree Investments  vs.  Fair Isaac Corp

WisdomTree Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fair Isaac Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fair Isaac Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fair Isaac is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Investments and Fair Isaac

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

The idea behind WisdomTree Investments and Fair Isaac 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.