Correlation Between Fair Isaac and OTP Bank

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

Diversification Opportunities for Fair Isaac and OTP Bank

0.18

Correlation Coefficient

Fair Isaac  OTP Bank

Average diversification

The 3 months correlation between Fair and OTP is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt 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 OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of Fair Isaac i.e., Fair Isaac and OTP Bank go up and down completely randomly.

Pair Corralation between Fair Isaac and OTP Bank

Assuming the 90 days trading horizon Fair Isaac Corp is expected to under-perform the OTP Bank. In addition to that, Fair Isaac is 1.17 times more volatile than OTP Bank Nyrt. It trades about -0.21 of its total potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.27 per unit of volatility. If you would invest  5,276  in OTP Bank Nyrt on October 25, 2024 and sell it today you would earn a total of  482.00  from holding OTP Bank Nyrt or generate 9.14% return on investment over 90 days.

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

Fair Isaac Corp  vs.  OTP Bank Nyrt

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.

OTP Bank Nyrt

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, OTP Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Isaac and OTP Bank

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

The idea behind Fair Isaac Corp and OTP Bank Nyrt 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.