Correlation Between Fair Isaac and PPG INDUSTRIES

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

Diversification Opportunities for Fair Isaac and PPG INDUSTRIES

0.22

Correlation Coefficient

Fair Isaac  PPG INDUSTRIES

Modest diversification

The 3 months correlation between Fair and PPG is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and PPG INDUSTRIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG INDUSTRIES 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 PPG INDUSTRIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG INDUSTRIES has no effect on the direction of Fair Isaac i.e., Fair Isaac and PPG INDUSTRIES go up and down completely randomly.

Pair Corralation between Fair Isaac and PPG INDUSTRIES

Assuming the 90 days trading horizon Fair Isaac Corp is expected to under-perform the PPG INDUSTRIES. In addition to that, Fair Isaac is 1.42 times more volatile than PPG INDUSTRIES. It trades about -0.33 of its total potential returns per unit of risk. PPG INDUSTRIES is currently generating about -0.25 per unit of volatility. If you would invest  11,800  in PPG INDUSTRIES on October 10, 2024 and sell it today you would lose (685.00) from holding PPG INDUSTRIES or give up 5.81% of portfolio value over 90 days.

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

Fair Isaac Corp  vs.  PPG INDUSTRIES

Fair Isaac Corp

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

PPG INDUSTRIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPG INDUSTRIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PPG INDUSTRIES is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fair Isaac and PPG INDUSTRIES

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

The idea behind Fair Isaac Corp and PPG INDUSTRIES 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.