Correlation Between Fair Isaac and Compagnie

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

Diversification Opportunities for Fair Isaac and Compagnie

0.47

Correlation Coefficient

Fair Isaac  Compagnie

Very weak diversification

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

Pair Corralation between Fair Isaac and Compagnie

Assuming the 90 days trading horizon Fair Isaac Corp is expected to generate 13.4 times more return on investment than Compagnie. However, Fair Isaac is 13.4 times more volatile than Compagnie de Saint Gobain. It trades about 0.05 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.08 per unit of risk. If you would invest  63,500  in Fair Isaac Corp on October 27, 2024 and sell it today you would earn a total of  111,650  from holding Fair Isaac Corp or generate 175.83% return on investment over 90 days.

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

Fair Isaac Corp  vs.  Compagnie de Saint Gobain

Fair Isaac Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fair Isaac Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fair Isaac is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Compagnie de Saint

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Saint Gobain are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, Compagnie may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fair Isaac and Compagnie

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

The idea behind Fair Isaac Corp and Compagnie de Saint Gobain 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..