Correlation Between FAIR ISAAC and TINC Comm

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

By analyzing existing cross correlation between FAIR ISAAC and TINC Comm VA, you can compare the effects of market volatilities on FAIR ISAAC and TINC Comm 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 TINC Comm. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAIR ISAAC and TINC Comm.

Diversification Opportunities for FAIR ISAAC and TINC Comm

0.01

Correlation Coefficient

FAIR ISAAC  TINC Comm

Significant diversification

The 3 months correlation between FAIR and TINC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC and TINC Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TINC Comm VA 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 TINC Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TINC Comm VA has no effect on the direction of FAIR ISAAC i.e., FAIR ISAAC and TINC Comm go up and down completely randomly.

Pair Corralation between FAIR ISAAC and TINC Comm

Assuming the 90 days trading horizon FAIR ISAAC is expected to generate 1.95 times more return on investment than TINC Comm. However, FAIR ISAAC is 1.95 times more volatile than TINC Comm VA. It trades about 0.12 of its potential returns per unit of risk. TINC Comm VA is currently generating about -0.02 per unit of risk. If you would invest  63,000  in FAIR ISAAC on October 26, 2024 and sell it today you would earn a total of  114,600  from holding FAIR ISAAC or generate 181.9% return on investment over 90 days.

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

FAIR ISAAC  vs.  TINC Comm VA

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 rather sound forward indicators, FAIR ISAAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TINC Comm VA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with FAIR ISAAC and TINC Comm

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

The idea behind FAIR ISAAC and TINC Comm VA 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.