Correlation Between FAIR ISAAC and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both FAIR ISAAC and Westinghouse Air 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 Westinghouse Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAIR ISAAC and Westinghouse Air Brake, you can compare the effects of market volatilities on FAIR ISAAC and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAIR ISAAC and Westinghouse Air.
Diversification Opportunities for FAIR ISAAC and Westinghouse Air
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FAIR and Westinghouse is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of FAIR ISAAC i.e., FAIR ISAAC and Westinghouse Air go up and down completely randomly.
Pair Corralation between FAIR ISAAC and Westinghouse Air
Assuming the 90 days trading horizon FAIR ISAAC is expected to generate 1.23 times more return on investment than Westinghouse Air. However, FAIR ISAAC is 1.23 times more volatile than Westinghouse Air Brake. It trades about 0.13 of its potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.1 per unit of risk. If you would invest 59,500 in FAIR ISAAC on October 13, 2024 and sell it today you would earn a total of 131,650 from holding FAIR ISAAC or generate 221.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
FAIR ISAAC vs. Westinghouse Air Brake
Performance |
| Timeline |
| FAIR ISAAC |
| Westinghouse Air Brake |
FAIR ISAAC and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAIR ISAAC and Westinghouse Air
The main advantage of trading using opposite FAIR ISAAC and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAIR ISAAC position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| FAIR ISAAC vs. COLUMBIA SPORTSWEAR | FAIR ISAAC vs. PKSHA TECHNOLOGY INC | FAIR ISAAC vs. Agilent Technologies | FAIR ISAAC vs. Digilife Technologies Limited |
| Westinghouse Air vs. SOGECLAIR SA INH | Westinghouse Air vs. Guangdong Investment Limited | Westinghouse Air vs. MEDCAW INVESTMENTS LS 01 | Westinghouse Air vs. FAIR ISAAC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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