Correlation Between Fair Isaac and Truist Financial

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

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

Diversification Opportunities for Fair Isaac and Truist Financial

-0.01

Correlation Coefficient

Fair Isaac  Truist Financial

Good diversification

The 3 months correlation between Fair and Truist is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial and Fair Isaac 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 Fair Isaac are associated (or correlated) with Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of Fair Isaac i.e., Fair Isaac and Truist Financial go up and down completely randomly.

Pair Corralation between Fair Isaac and Truist Financial

Assuming the 90 days trading horizon Fair Isaac is expected to under-perform the Truist Financial. In addition to that, Fair Isaac is 1.08 times more volatile than Truist Financial. It trades about -0.2 of its total potential returns per unit of risk. Truist Financial is currently generating about -0.08 per unit of volatility. If you would invest  25,985  in Truist Financial on December 23, 2024 and sell it today you would lose (2,548) from holding Truist Financial or give up 9.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Fair Isaac  vs.  Truist Financial

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. Despite weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Truist Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Truist Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fair Isaac and Truist Financial

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

The idea behind Fair Isaac and Truist Financial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.