Correlation Between Fair Isaac and Newtek Business

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

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

Diversification Opportunities for Fair Isaac and Newtek Business

0.9

Correlation Coefficient

Fair Isaac  Newtek Business

Almost no diversification

The 3 months correlation between Fair and Newtek is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and Newtek Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtek Business Services 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 Corp are associated (or correlated) with Newtek Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtek Business Services has no effect on the direction of Fair Isaac i.e., Fair Isaac and Newtek Business go up and down completely randomly.

Pair Corralation between Fair Isaac and Newtek Business

Assuming the 90 days trading horizon Fair Isaac Corp is expected to under-perform the Newtek Business. In addition to that, Fair Isaac is 1.02 times more volatile than Newtek Business Services. It trades about -0.43 of its total potential returns per unit of risk. Newtek Business Services is currently generating about -0.19 per unit of volatility. If you would invest  1,364  in Newtek Business Services on October 2, 2024 and sell it today you would lose (93.00) from holding Newtek Business Services or give up 6.82% of portfolio value over 90 days.

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

Fair Isaac Corp  vs.  Newtek Business Services

Fair Isaac Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fair Isaac unveiled solid returns over the last few months and may actually be approaching a breakup point.

Newtek Business Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtek Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Isaac and Newtek Business

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

The idea behind Fair Isaac Corp and Newtek Business Services 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.