Correlation Between Fair Isaac and Cognex
Can any of the company-specific risk be diversified away by investing in both Fair Isaac and Cognex 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 Cognex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Isaac and Cognex, you can compare the effects of market volatilities on Fair Isaac and Cognex 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 Cognex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Cognex.
Diversification Opportunities for Fair Isaac and Cognex
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fair and Cognex is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex 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 are associated (or correlated) with Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Fair Isaac i.e., Fair Isaac and Cognex go up and down completely randomly.
Pair Corralation between Fair Isaac and Cognex
Given the investment horizon of 90 days Fair Isaac is expected to generate 0.8 times more return on investment than Cognex. However, Fair Isaac is 1.25 times less risky than Cognex. It trades about 0.17 of its potential returns per unit of risk. Cognex is currently generating about 0.03 per unit of risk. If you would invest 107,510 in Fair Isaac on August 25, 2024 and sell it today you would earn a total of 128,025 from holding Fair Isaac or generate 119.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fair Isaac vs. Cognex
Performance |
| Timeline |
| Fair Isaac |
| Cognex |
Fair Isaac and Cognex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Isaac and Cognex
The main advantage of trading using opposite Fair Isaac and Cognex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac position performs unexpectedly, Cognex 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 Cognex will offset losses from the drop in Cognex's long position.| Fair Isaac vs. SAP SE ADR | Fair Isaac vs. Tyler Technologies | Fair Isaac vs. Roper Technologies, Common | Fair Isaac vs. Cadence Design Systems |
| Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex vs. MKS Instruments |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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