Correlation Between Fair Isaac and EMCOR

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

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

Diversification Opportunities for Fair Isaac and EMCOR

0.74

Correlation Coefficient

Fair Isaac  EMCOR

Poor diversification

The 3 months correlation between Fair and EMCOR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Fair Isaac i.e., Fair Isaac and EMCOR go up and down completely randomly.

Pair Corralation between Fair Isaac and EMCOR

Given the investment horizon of 90 days Fair Isaac is expected to under-perform the EMCOR. In addition to that, Fair Isaac is 1.03 times more volatile than EMCOR Group. It trades about -0.26 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.28 per unit of volatility. If you would invest  46,303  in EMCOR Group on October 23, 2024 and sell it today you would earn a total of  4,344  from holding EMCOR Group or generate 9.38% return on investment over 90 days.

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

Fair Isaac  vs.  EMCOR Group

Fair Isaac

Risk-Adjusted Performance

0 of 100

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 very healthy fundamental indicators, Fair Isaac is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

EMCOR Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EMCOR Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, EMCOR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Isaac and EMCOR

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

The idea behind Fair Isaac and EMCOR 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.