Correlation Between Meridianlink and Fair Isaac

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

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

Diversification Opportunities for Meridianlink and Fair Isaac

0.27

Correlation Coefficient

Meridianlink  Fair Isaac

Modest diversification

The 3 months correlation between Meridianlink and Fair is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac and Meridianlink 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 Meridianlink 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 has no effect on the direction of Meridianlink i.e., Meridianlink and Fair Isaac go up and down completely randomly.

Pair Corralation between Meridianlink and Fair Isaac

Given the investment horizon of 90 days Meridianlink is expected to generate 6.65 times less return on investment than Fair Isaac. In addition to that, Meridianlink is 1.3 times more volatile than Fair Isaac. It trades about 0.02 of its total potential returns per unit of risk. Fair Isaac is currently generating about 0.15 per unit of volatility. If you would invest  85,216  in Fair Isaac on September 12, 2024 and sell it today you would earn a total of  132,053  from holding Fair Isaac or generate 154.96% return on investment over 90 days.

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

Meridianlink  vs.  Fair Isaac

Meridianlink

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Fair Isaac

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Fair Isaac displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meridianlink and Fair Isaac

The main advantage of trading using opposite Meridianlink and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meridianlink 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 Meridianlink and Fair Isaac 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.