Correlation Between Fair Isaac and IA Financial

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

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

Diversification Opportunities for Fair Isaac and IA Financial

0.28

Correlation Coefficient

Fair Isaac  IA Financial

Modest diversification

The 3 months correlation between Fair and IAFNF is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Fair Isaac i.e., Fair Isaac and IA Financial go up and down completely randomly.

Pair Corralation between Fair Isaac and IA Financial

Given the investment horizon of 90 days Fair Isaac is expected to under-perform the IA Financial. In addition to that, Fair Isaac is 1.39 times more volatile than iA Financial. It trades about -0.04 of its total potential returns per unit of risk. iA Financial is currently generating about -0.02 per unit of volatility. If you would invest  9,178  in iA Financial on December 28, 2024 and sell it today you would lose (233.00) from holding iA Financial or give up 2.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Fair Isaac  vs.  iA Financial

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 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.

iA Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days iA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IA Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fair Isaac and IA Financial

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

The idea behind Fair Isaac and iA Financial 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.