Correlation Between Fair Isaac and Douglas Emmett

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

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

Diversification Opportunities for Fair Isaac and Douglas Emmett

0.83

Correlation Coefficient

Fair Isaac  Douglas Emmett

Very poor diversification

The 3 months correlation between Fair and Douglas is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Douglas Emmett in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Douglas Emmett 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 Douglas Emmett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Douglas Emmett has no effect on the direction of Fair Isaac i.e., Fair Isaac and Douglas Emmett go up and down completely randomly.

Pair Corralation between Fair Isaac and Douglas Emmett

Given the investment horizon of 90 days Fair Isaac is expected to under-perform the Douglas Emmett. But the stock apears to be less risky and, when comparing its historical volatility, Fair Isaac is 1.03 times less risky than Douglas Emmett. The stock trades about -0.08 of its potential returns per unit of risk. The Douglas Emmett is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,766  in Douglas Emmett on December 19, 2024 and sell it today you would lose (173.00) from holding Douglas Emmett or give up 9.8% of portfolio value over 90 days.

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

Fair Isaac  vs.  Douglas Emmett

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.

Douglas Emmett

Risk-Adjusted Performance

Very Weak

Over the last 90 days Douglas Emmett has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Fair Isaac and Douglas Emmett

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

The idea behind Fair Isaac and Douglas Emmett 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.