Correlation Between Fair Isaac and Chesapeake Utilities

Can any of the company-specific risk be diversified away by investing in both Fair Isaac and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Fair Isaac and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Chesapeake Utilities.

Diversification Opportunities for Fair Isaac and Chesapeake Utilities

0.92

Correlation Coefficient

Fair Isaac  Chesapeake Utilities

Almost no diversification

The 3 months correlation between Fair and Chesapeake is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Fair Isaac i.e., Fair Isaac and Chesapeake Utilities go up and down completely randomly.

Pair Corralation between Fair Isaac and Chesapeake Utilities

Assuming the 90 days trading horizon Fair Isaac Corp is expected to under-perform the Chesapeake Utilities. In addition to that, Fair Isaac is 1.75 times more volatile than Chesapeake Utilities. It trades about -0.06 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about -0.03 per unit of volatility. If you would invest  12,100  in Chesapeake Utilities on September 17, 2024 and sell it today you would lose (100.00) from holding Chesapeake Utilities or give up 0.83% 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.  Chesapeake Utilities

Fair Isaac Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fair Isaac unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chesapeake Utilities

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chesapeake Utilities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fair Isaac and Chesapeake Utilities

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

The idea behind Fair Isaac Corp and Chesapeake Utilities 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.