Correlation Between Fair Isaac and Blackline

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

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

Diversification Opportunities for Fair Isaac and Blackline

0.84

Correlation Coefficient

Fair Isaac  Blackline

Very poor diversification

The 3 months correlation between Fair and Blackline is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline 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 Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of Fair Isaac i.e., Fair Isaac and Blackline go up and down completely randomly.

Pair Corralation between Fair Isaac and Blackline

Assuming the 90 days horizon Fair Isaac is expected to under-perform the Blackline. In addition to that, Fair Isaac is 1.41 times more volatile than Blackline. It trades about -0.22 of its total potential returns per unit of risk. Blackline is currently generating about 0.01 per unit of volatility. If you would invest  5,950  in Blackline on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Blackline or generate 0.0% return on investment over 90 days.

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

Fair Isaac  vs.  Blackline

Fair Isaac

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fair Isaac reported solid returns over the last few months and may actually be approaching a breakup point.

Blackline

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackline reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Isaac and Blackline

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

The idea behind Fair Isaac and Blackline 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.