Correlation Between FAIR ISAAC and HomeToGo

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

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

Diversification Opportunities for FAIR ISAAC and HomeToGo

0.47

Correlation Coefficient

FAIR ISAAC  HomeToGo

Very weak diversification

The 3 months correlation between FAIR and HomeToGo is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of FAIR ISAAC i.e., FAIR ISAAC and HomeToGo go up and down completely randomly.

Pair Corralation between FAIR ISAAC and HomeToGo

Assuming the 90 days trading horizon FAIR ISAAC is expected to under-perform the HomeToGo. In addition to that, FAIR ISAAC is 1.15 times more volatile than HomeToGo SE. It trades about -0.07 of its total potential returns per unit of risk. HomeToGo SE is currently generating about -0.06 per unit of volatility. If you would invest  199.00  in HomeToGo SE on December 24, 2024 and sell it today you would lose (20.00) from holding HomeToGo SE or give up 10.05% 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.  HomeToGo SE

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.

HomeToGo SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days HomeToGo SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with FAIR ISAAC and HomeToGo

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

The idea behind FAIR ISAAC and HomeToGo SE 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.