Correlation Between Fair Isaac and American Eagle
Can any of the company-specific risk be diversified away by investing in both Fair Isaac and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Isaac Corp and American Eagle Outfitters, you can compare the effects of market volatilities on Fair Isaac and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and American Eagle.
Diversification Opportunities for Fair Isaac and American Eagle
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fair and American is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 Corp are associated (or correlated) with American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of Fair Isaac i.e., Fair Isaac and American Eagle go up and down completely randomly.
Pair Corralation between Fair Isaac and American Eagle
Assuming the 90 days trading horizon Fair Isaac Corp is expected to generate 0.98 times more return on investment than American Eagle. However, Fair Isaac Corp is 1.02 times less risky than American Eagle. It trades about -0.05 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.47 per unit of risk. If you would invest 180,800 in Fair Isaac Corp on December 1, 2024 and sell it today you would lose (4,800) from holding Fair Isaac Corp or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fair Isaac Corp vs. American Eagle Outfitters
Performance |
| Timeline |
| Fair Isaac Corp |
| American Eagle Outfitters |
Fair Isaac and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Isaac and American Eagle
The main advantage of trading using opposite Fair Isaac and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| Fair Isaac vs. GOME Retail Holdings | Fair Isaac vs. AEON STORES | Fair Isaac vs. GOLDQUEST MINING | Fair Isaac vs. Eskay Mining Corp |
| American Eagle vs. HUTCHISON TELECOMM | American Eagle vs. Chengdu PUTIAN Telecommunications | American Eagle vs. The Yokohama Rubber | American Eagle vs. NEWELL RUBBERMAID |
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 Correlations module to find global opportunities by holding instruments from different markets.
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