Correlation Between EGain and Fair Isaac

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

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

Diversification Opportunities for EGain and Fair Isaac

0.37

Correlation Coefficient

EGain  Fair Isaac

Weak diversification

The 3 months correlation between EGain and Fair is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding eGain and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac and EGain 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 eGain 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 has no effect on the direction of EGain i.e., EGain and Fair Isaac go up and down completely randomly.

Pair Corralation between EGain and Fair Isaac

Given the investment horizon of 90 days eGain is expected to under-perform the Fair Isaac. In addition to that, EGain is 1.58 times more volatile than Fair Isaac. It trades about -0.1 of its total potential returns per unit of risk. Fair Isaac is currently generating about -0.05 per unit of volatility. If you would invest  203,733  in Fair Isaac on December 27, 2024 and sell it today you would lose (16,687) from holding Fair Isaac or give up 8.19% of portfolio value over 90 days.

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

eGain  vs.  Fair Isaac

eGain

Risk-Adjusted Performance

Very Weak

Over the last 90 days eGain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fair Isaac

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with EGain and Fair Isaac

The main advantage of trading using opposite EGain and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGain 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 eGain and Fair Isaac 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.