Correlation Between Fair Isaac and Exela Technologies

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

By analyzing existing cross correlation between Fair Isaac and Exela Technologies, you can compare the effects of market volatilities on Fair Isaac and Exela Technologies 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 Exela Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Exela Technologies.

Diversification Opportunities for Fair Isaac and Exela Technologies

0.05

Correlation Coefficient

Fair Isaac  Exela Technologies

Significant diversification

The 3 months correlation between Fair and Exela is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and Exela Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exela Technologies 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 Exela Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exela Technologies has no effect on the direction of Fair Isaac i.e., Fair Isaac and Exela Technologies go up and down completely randomly.

Pair Corralation between Fair Isaac and Exela Technologies

Given the investment horizon of 90 days Fair Isaac is expected to generate 0.33 times more return on investment than Exela Technologies. However, Fair Isaac is 3.06 times less risky than Exela Technologies. It trades about -0.05 of its potential returns per unit of risk. Exela Technologies is currently generating about -0.02 per unit of risk. If you would invest  128,427  in Fair Isaac on January 25, 2024 and sell it today you would lose (9,608) from holding Fair Isaac or give up 7.48% of portfolio value over 90 days.

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

Fair Isaac  vs.  Exela Technologies

Fair Isaac

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fair Isaac and Exela Technologies

The main advantage of trading using opposite Fair Isaac and Exela Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Isaac position performs unexpectedly, Exela Technologies 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 Exela Technologies will offset losses from the drop in Exela Technologies' long position.

The idea behind Fair Isaac and Exela Technologies 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.