Correlation Between Fathom Holdings and Altisource Portfolio

Can any of the company-specific risk be diversified away by investing in both Fathom Holdings and Altisource Portfolio 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 Fathom Holdings and Altisource Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fathom Holdings and Altisource Portfolio Solutions, you can compare the effects of market volatilities on Fathom Holdings and Altisource Portfolio 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 Fathom Holdings with a short position of Altisource Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fathom Holdings and Altisource Portfolio.

Diversification Opportunities for Fathom Holdings and Altisource Portfolio

0.9

Correlation Coefficient

Fathom Holdings  Altisource Portfolio

Almost no diversification

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

Pair Corralation between Fathom Holdings and Altisource Portfolio

Given the investment horizon of 90 days Fathom Holdings is expected to generate 0.84 times more return on investment than Altisource Portfolio. However, Fathom Holdings is 1.19 times less risky than Altisource Portfolio. It trades about -0.04 of its potential returns per unit of risk. Altisource Portfolio Solutions is currently generating about -0.06 per unit of risk. If you would invest  305.00  in Fathom Holdings on October 9, 2024 and sell it today you would lose (160.00) from holding Fathom Holdings or give up 52.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.6%
Values	Daily Returns

Fathom Holdings  vs.  Altisource Portfolio Solutions

Fathom Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fathom Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Altisource Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altisource Portfolio Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fathom Holdings and Altisource Portfolio

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

The idea behind Fathom Holdings and Altisource Portfolio Solutions 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.