Correlation Between FAIR ISAAC and Canon

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

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

Diversification Opportunities for FAIR ISAAC and Canon

0.44

Correlation Coefficient

FAIR ISAAC  Canon

Very weak diversification

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

Pair Corralation between FAIR ISAAC and Canon

Assuming the 90 days trading horizon FAIR ISAAC is expected to under-perform the Canon. In addition to that, FAIR ISAAC is 1.47 times more volatile than Canon Inc. It trades about -0.24 of its total potential returns per unit of risk. Canon Inc is currently generating about -0.15 per unit of volatility. If you would invest  3,141  in Canon Inc on October 24, 2024 and sell it today you would lose (132.00) from holding Canon Inc or give up 4.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

FAIR ISAAC  vs.  Canon Inc

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Canon Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canon Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Canon 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 Canon

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

The idea behind FAIR ISAAC and Canon Inc 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.