Correlation Between AM EAGLE and Fair Isaac

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

By analyzing existing cross correlation between AM EAGLE OUTFITTERS and Fair Isaac Corp, you can compare the effects of market volatilities on AM EAGLE and Fair Isaac 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 AM EAGLE with a short position of Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Fair Isaac.

Diversification Opportunities for AM EAGLE and Fair Isaac

-0.29

Correlation Coefficient

AM EAGLE  Fair Isaac

Very good diversification

The 3 months correlation between AFG and Fair is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS and Fair Isaac Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac Corp and AM EAGLE 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 AM EAGLE OUTFITTERS are associated (or correlated) with Fair Isaac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Isaac Corp has no effect on the direction of AM EAGLE i.e., AM EAGLE and Fair Isaac go up and down completely randomly.

Pair Corralation between AM EAGLE and Fair Isaac

Assuming the 90 days trading horizon AM EAGLE is expected to generate 10.8 times less return on investment than Fair Isaac. In addition to that, AM EAGLE is 1.13 times more volatile than Fair Isaac Corp. It trades about 0.02 of its total potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.28 per unit of volatility. If you would invest  157,700  in Fair Isaac Corp on September 3, 2024 and sell it today you would earn a total of  68,800  from holding Fair Isaac Corp or generate 43.63% return on investment over 90 days.

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

AM EAGLE OUTFITTERS  vs.  Fair Isaac Corp

AM EAGLE OUTFITTERS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AM EAGLE OUTFITTERS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, AM EAGLE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Fair Isaac Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fair Isaac unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AM EAGLE and Fair Isaac

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

The idea behind AM EAGLE OUTFITTERS and Fair Isaac Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.