Correlation Between Box and Fair Isaac
Can any of the company-specific risk be diversified away by investing in both Box 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 Box and Fair Isaac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Box Inc and Fair Isaac, you can compare the effects of market volatilities on Box 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 Box with a short position of Fair Isaac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Box and Fair Isaac.
Diversification Opportunities for Box and Fair Isaac
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Box and Fair is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Fair Isaac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Isaac and Box 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 Box Inc 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 has no effect on the direction of Box i.e., Box and Fair Isaac go up and down completely randomly.
Pair Corralation between Box and Fair Isaac
Considering the 90-day investment horizon Box Inc is expected to under-perform the Fair Isaac. But the stock apears to be less risky and, when comparing its historical volatility, Box Inc is 1.44 times less risky than Fair Isaac. The stock trades about -0.49 of its potential returns per unit of risk. The Fair Isaac is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 122,274 in Fair Isaac on January 17, 2024 and sell it today you would lose (7,222) from holding Fair Isaac or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Box Inc vs. Fair Isaac
Performance |
| Timeline |
| Box Inc |
| Fair Isaac |
Box and Fair Isaac Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Box and Fair Isaac
The main advantage of trading using opposite Box and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Box 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 Box Inc and Fair Isaac 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.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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