Correlation Between Fair Isaac and NEWMONT

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

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

Diversification Opportunities for Fair Isaac and NEWMONT

-0.44

Correlation Coefficient

Fair Isaac  NEWMONT

Very good diversification

The 3 months correlation between Fair and NEWMONT is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and NEWMONT MNG P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEWMONT MNG P 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 NEWMONT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEWMONT MNG P has no effect on the direction of Fair Isaac i.e., Fair Isaac and NEWMONT go up and down completely randomly.

Pair Corralation between Fair Isaac and NEWMONT

Given the investment horizon of 90 days Fair Isaac is expected to generate 25.66 times less return on investment than NEWMONT. But when comparing it to its historical volatility, Fair Isaac is 47.63 times less risky than NEWMONT. It trades about 0.14 of its potential returns per unit of risk. NEWMONT MNG P is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,869  in NEWMONT MNG P on October 4, 2024 and sell it today you would lose (475.00) from holding NEWMONT MNG P or give up 4.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	84.07%
Values	Daily Returns

Fair Isaac  vs.  NEWMONT MNG P

Fair Isaac

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Fair Isaac is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NEWMONT MNG P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEWMONT MNG P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NEWMONT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fair Isaac and NEWMONT

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

The idea behind Fair Isaac and NEWMONT MNG P 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.