Correlation Between MGIC INVESTMENT and Fair Isaac

Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and Fair Isaac 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 MGIC INVESTMENT and Fair Isaac into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MGIC INVESTMENT and Fair Isaac Corp, you can compare the effects of market volatilities on MGIC INVESTMENT and Fair Isaac 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 MGIC INVESTMENT with a short position of Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and Fair Isaac.

Diversification Opportunities for MGIC INVESTMENT and Fair Isaac

0.62

Correlation Coefficient

MGIC INVESTMENT  Fair Isaac

Poor diversification

The 3 months correlation between MGIC and Fair is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp and MGIC INVESTMENT 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 MGIC INVESTMENT are associated (or correlated) with Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and Fair Isaac go up and down completely randomly.

Pair Corralation between MGIC INVESTMENT and Fair Isaac

Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.69 times more return on investment than Fair Isaac. However, MGIC INVESTMENT is 1.44 times less risky than Fair Isaac. It trades about -0.3 of its potential returns per unit of risk. Fair Isaac Corp is currently generating about -0.37 per unit of risk. If you would invest  2,480  in MGIC INVESTMENT on October 4, 2024 and sell it today you would lose (180.00) from holding MGIC INVESTMENT or give up 7.26% of portfolio value over 90 days.

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

MGIC INVESTMENT  vs.  Fair Isaac Corp

MGIC INVESTMENT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGIC INVESTMENT are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, MGIC INVESTMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fair Isaac Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fair Isaac may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MGIC INVESTMENT and Fair Isaac

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

The idea behind MGIC INVESTMENT and Fair Isaac Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.