Correlation Between FedEx and Fair Isaac

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

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

Diversification Opportunities for FedEx and Fair Isaac

0.83

Correlation Coefficient

FedEx  Fair Isaac

Very poor diversification

The 3 months correlation between FedEx and Fair is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding FedEx and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac and FedEx 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 FedEx 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 FedEx i.e., FedEx and Fair Isaac go up and down completely randomly.

Pair Corralation between FedEx and Fair Isaac

Assuming the 90 days trading horizon FedEx is expected to generate 0.84 times more return on investment than Fair Isaac. However, FedEx is 1.19 times less risky than Fair Isaac. It trades about -0.02 of its potential returns per unit of risk. Fair Isaac is currently generating about -0.41 per unit of risk. If you would invest  168,816  in FedEx on October 11, 2024 and sell it today you would lose (979.00) from holding FedEx or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

FedEx  vs.  Fair Isaac

FedEx

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FedEx sustained solid returns over the last few months and may actually be approaching a breakup point.

Fair Isaac

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Fair Isaac is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FedEx and Fair Isaac

The main advantage of trading using opposite FedEx and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FedEx 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 FedEx 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.