Correlation Between Fair Isaac and EBay

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

By analyzing existing cross correlation between Fair Isaac and eBay Inc, you can compare the effects of market volatilities on Fair Isaac and EBay 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 EBay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and EBay.

Diversification Opportunities for Fair Isaac and EBay

0.49

Correlation Coefficient

Fair Isaac  EBay

Very weak diversification

The 3 months correlation between Fair and EBay is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and eBay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eBay Inc 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 EBay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eBay Inc has no effect on the direction of Fair Isaac i.e., Fair Isaac and EBay go up and down completely randomly.

Pair Corralation between Fair Isaac and EBay

Assuming the 90 days trading horizon Fair Isaac is expected to generate 1.1 times more return on investment than EBay. However, Fair Isaac is 1.1 times more volatile than eBay Inc. It trades about 0.07 of its potential returns per unit of risk. eBay Inc is currently generating about 0.03 per unit of risk. If you would invest  24,519  in Fair Isaac on October 8, 2024 and sell it today you would earn a total of  2,066  from holding Fair Isaac or generate 8.43% return on investment over 90 days.

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

Fair Isaac  vs.  eBay Inc

Fair Isaac

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Fair Isaac may actually be approaching a critical reversion point that can send shares even higher in February 2025.

eBay Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in eBay Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, EBay is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fair Isaac and EBay

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

The idea behind Fair Isaac and eBay 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.