Correlation Between FAIR ISAAC and TTM Technologies

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

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

Diversification Opportunities for FAIR ISAAC and TTM Technologies

0.72

Correlation Coefficient

FAIR ISAAC  TTM Technologies

Poor diversification

The 3 months correlation between FAIR and TTM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of FAIR ISAAC i.e., FAIR ISAAC and TTM Technologies go up and down completely randomly.

Pair Corralation between FAIR ISAAC and TTM Technologies

Assuming the 90 days trading horizon FAIR ISAAC is expected to generate 0.79 times more return on investment than TTM Technologies. However, FAIR ISAAC is 1.26 times less risky than TTM Technologies. It trades about 0.13 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.05 per unit of risk. If you would invest  57,500  in FAIR ISAAC on October 11, 2024 and sell it today you would earn a total of  128,600  from holding FAIR ISAAC or generate 223.65% return on investment over 90 days.

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

FAIR ISAAC  vs.  TTM Technologies

FAIR ISAAC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FAIR ISAAC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

TTM Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TTM Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TTM Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAIR ISAAC and TTM Technologies

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

The idea behind FAIR ISAAC and TTM Technologies 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.