Correlation Between Fair Isaac and Trade Desk

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

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

Diversification Opportunities for Fair Isaac and Trade Desk

0.79

Correlation Coefficient

Fair Isaac  Trade Desk

Poor diversification

The 3 months correlation between Fair and Trade is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Fair Isaac i.e., Fair Isaac and Trade Desk go up and down completely randomly.

Pair Corralation between Fair Isaac and Trade Desk

Assuming the 90 days trading horizon Fair Isaac is expected to generate 0.39 times more return on investment than Trade Desk. However, Fair Isaac is 2.58 times less risky than Trade Desk. It trades about -0.19 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.23 per unit of risk. If you would invest  28,462  in Fair Isaac on December 24, 2024 and sell it today you would lose (5,862) from holding Fair Isaac or give up 20.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.83%
Values	Daily Returns

Fair Isaac  vs.  The Trade Desk

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.

Trade Desk

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Trade Desk 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 basic 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.

Pair Trading with Fair Isaac and Trade Desk

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

The idea behind Fair Isaac and The Trade Desk 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.