Correlation Between FAIR ISAAC and Estée Lauder

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

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

Diversification Opportunities for FAIR ISAAC and Estée Lauder

0.55

Correlation Coefficient

FAIR ISAAC  Estée Lauder

Very weak diversification

The 3 months correlation between FAIR and Estée is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC and The Este Lauder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estée Lauder 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 Estée Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estée Lauder has no effect on the direction of FAIR ISAAC i.e., FAIR ISAAC and Estée Lauder go up and down completely randomly.

Pair Corralation between FAIR ISAAC and Estée Lauder

Assuming the 90 days trading horizon FAIR ISAAC is expected to under-perform the Estée Lauder. But the stock apears to be less risky and, when comparing its historical volatility, FAIR ISAAC is 1.11 times less risky than Estée Lauder. The stock trades about -0.09 of its potential returns per unit of risk. The The Este Lauder is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,127  in The Este Lauder on December 20, 2024 and sell it today you would lose (927.00) from holding The Este Lauder or give up 13.01% of portfolio value over 90 days.

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

FAIR ISAAC  vs.  The Este Lauder

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 fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Estée Lauder

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Este Lauder has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 Estée Lauder

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

The idea behind FAIR ISAAC and The Este Lauder 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 Global Correlations module to find global opportunities by holding instruments from different markets.