Correlation Between DELTA AIR and Fair Isaac

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

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

Diversification Opportunities for DELTA AIR and Fair Isaac

0.95

Correlation Coefficient

DELTA AIR  Fair Isaac

Almost no diversification

The 3 months correlation between DELTA and Fair is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding DELTA AIR LINES 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 DELTA AIR 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 DELTA AIR LINES 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 DELTA AIR i.e., DELTA AIR and Fair Isaac go up and down completely randomly.

Pair Corralation between DELTA AIR and Fair Isaac

Assuming the 90 days trading horizon DELTA AIR is expected to generate 7.52 times less return on investment than Fair Isaac. But when comparing it to its historical volatility, DELTA AIR LINES is 10.01 times less risky than Fair Isaac. It trades about 0.07 of its potential returns per unit of risk. Fair Isaac Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  58,000  in Fair Isaac Corp on September 3, 2024 and sell it today you would earn a total of  168,500  from holding Fair Isaac Corp or generate 290.52% return on investment over 90 days.

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

DELTA AIR LINES  vs.  Fair Isaac Corp

DELTA AIR LINES

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DELTA AIR LINES are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DELTA AIR unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 DELTA AIR and Fair Isaac

The main advantage of trading using opposite DELTA AIR and Fair Isaac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DELTA AIR 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 DELTA AIR LINES 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.