Correlation Between Fair Isaac and Peninsula Energy

Can any of the company-specific risk be diversified away by investing in both Fair Isaac and Peninsula Energy 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 Peninsula Energy 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 Peninsula Energy Limited, you can compare the effects of market volatilities on Fair Isaac and Peninsula Energy 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 Peninsula Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Isaac and Peninsula Energy.

Diversification Opportunities for Fair Isaac and Peninsula Energy

-0.67

Correlation Coefficient

Fair Isaac  Peninsula Energy

Excellent diversification

The 3 months correlation between Fair and Peninsula is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac Corp and Peninsula Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy 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 Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of Fair Isaac i.e., Fair Isaac and Peninsula Energy go up and down completely randomly.

Pair Corralation between Fair Isaac and Peninsula Energy

Assuming the 90 days trading horizon Fair Isaac Corp is expected to generate 0.54 times more return on investment than Peninsula Energy. However, Fair Isaac Corp is 1.86 times less risky than Peninsula Energy. It trades about -0.06 of its potential returns per unit of risk. Peninsula Energy Limited is currently generating about -0.08 per unit of risk. If you would invest  215,000  in Fair Isaac Corp on September 17, 2024 and sell it today you would lose (6,100) from holding Fair Isaac Corp or give up 2.84% of portfolio value over 90 days.

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

Fair Isaac Corp  vs.  Peninsula Energy Limited

Fair Isaac Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Isaac Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fair Isaac unveiled solid returns over the last few months and may actually be approaching a breakup point.

Peninsula Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peninsula Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Fair Isaac and Peninsula Energy

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

The idea behind Fair Isaac Corp and Peninsula Energy Limited 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.