Correlation Between Fair Isaac and FORWARD AIR
Can any of the company-specific risk be diversified away by investing in both Fair Isaac and FORWARD 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 FORWARD AIR 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 FORWARD AIR P, you can compare the effects of market volatilities on Fair Isaac and FORWARD 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 FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and FORWARD AIR.
Diversification Opportunities for Fair Isaac and FORWARD AIR
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fair and FORWARD is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P 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 FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Fair Isaac i.e., Fair Isaac and FORWARD AIR go up and down completely randomly.
Pair Corralation between Fair Isaac and FORWARD AIR
Assuming the 90 days trading horizon Fair Isaac Corp is expected to generate 4.58 times more return on investment than FORWARD AIR. However, Fair Isaac is 4.58 times more volatile than FORWARD AIR P. It trades about 0.06 of its potential returns per unit of risk. FORWARD AIR P is currently generating about -0.03 per unit of risk. If you would invest 58,000 in Fair Isaac Corp on August 27, 2024 and sell it today you would earn a total of 166,800 from holding Fair Isaac Corp or generate 287.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fair Isaac Corp vs. FORWARD AIR P
Performance |
| Timeline |
| Fair Isaac Corp |
| FORWARD AIR P |
Fair Isaac and FORWARD AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Isaac and FORWARD AIR
The main advantage of trading using opposite Fair Isaac and FORWARD AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac position performs unexpectedly, FORWARD 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 FORWARD AIR will offset losses from the drop in FORWARD AIR's long position.The idea behind Fair Isaac Corp and FORWARD AIR P 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.| FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc | FORWARD AIR vs. Apple Inc |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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