Correlation Between Fair Isaac and RBC Bearings

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

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

Diversification Opportunities for Fair Isaac and RBC Bearings

0.82

Correlation Coefficient

Fair Isaac  RBC Bearings

Very poor diversification

The 3 months correlation between Fair and RBC is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of Fair Isaac i.e., Fair Isaac and RBC Bearings go up and down completely randomly.

Pair Corralation between Fair Isaac and RBC Bearings

Given the investment horizon of 90 days Fair Isaac is expected to generate 1.08 times more return on investment than RBC Bearings. However, Fair Isaac is 1.08 times more volatile than RBC Bearings Incorporated. It trades about 0.12 of its potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.04 per unit of risk. If you would invest  68,268  in Fair Isaac on October 23, 2024 and sell it today you would earn a total of  121,786  from holding Fair Isaac or generate 178.39% return on investment over 90 days.

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

Fair Isaac  vs.  RBC Bearings Incorporated

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.

RBC Bearings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fair Isaac and RBC Bearings

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

The idea behind Fair Isaac and RBC Bearings Incorporated 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.