Correlation Between Trade Desk and Fair Isaac

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

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

Diversification Opportunities for Trade Desk and Fair Isaac

0.72

Correlation Coefficient

Trade Desk  Fair Isaac

Poor diversification

The 3 months correlation between Trade and Fair is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Trade Desk 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 Trade Desk 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 The Trade Desk 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 Trade Desk i.e., Trade Desk and Fair Isaac go up and down completely randomly.

Pair Corralation between Trade Desk and Fair Isaac

Assuming the 90 days trading horizon Trade Desk is expected to generate 1.36 times less return on investment than Fair Isaac. In addition to that, Trade Desk is 1.54 times more volatile than Fair Isaac Corp. It trades about 0.07 of its total potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.14 per unit of volatility. If you would invest  131,500  in Fair Isaac Corp on October 13, 2024 and sell it today you would earn a total of  59,500  from holding Fair Isaac Corp or generate 45.25% return on investment over 90 days.

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

The Trade Desk  vs.  Fair Isaac Corp

Trade Desk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Trade Desk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Trade Desk and Fair Isaac

The main advantage of trading using opposite Trade Desk and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trade Desk 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 The Trade Desk 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.