Correlation Between Fair Isaac and Alaska Air

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

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

Diversification Opportunities for Fair Isaac and Alaska Air

-0.17

Correlation Coefficient

Fair Isaac  Alaska Air

Good diversification

The 3 months correlation between Fair and Alaska is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Fair Isaac i.e., Fair Isaac and Alaska Air go up and down completely randomly.

Pair Corralation between Fair Isaac and Alaska Air

Given the investment horizon of 90 days Fair Isaac is expected to generate 0.81 times more return on investment than Alaska Air. However, Fair Isaac is 1.23 times less risky than Alaska Air. It trades about -0.08 of its potential returns per unit of risk. Alaska Air Group is currently generating about -0.12 per unit of risk. If you would invest  204,489  in Fair Isaac on December 19, 2024 and sell it today you would lose (23,128) from holding Fair Isaac or give up 11.31% of portfolio value over 90 days.

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

Fair Isaac  vs.  Alaska Air Group

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 weak 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.

Alaska Air Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Fair Isaac and Alaska Air

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

The idea behind Fair Isaac and Alaska Air Group 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.