Correlation Between Fair Isaac and LPL Financial

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

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

Diversification Opportunities for Fair Isaac and LPL Financial

-0.18

Correlation Coefficient

Fair Isaac  LPL Financial

Good diversification

The 3 months correlation between Fair and LPL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fair Isaac and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings 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 LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Fair Isaac i.e., Fair Isaac and LPL Financial go up and down completely randomly.

Pair Corralation between Fair Isaac and LPL Financial

Assuming the 90 days trading horizon Fair Isaac is expected to under-perform the LPL Financial. In addition to that, Fair Isaac is 2.19 times more volatile than LPL Financial Holdings. It trades about -0.07 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.16 per unit of volatility. If you would invest  9,875  in LPL Financial Holdings on April 23, 2025 and sell it today you would earn a total of  1,837  from holding LPL Financial Holdings or generate 18.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Fair Isaac  vs.  LPL Financial Holdings

Fair Isaac

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fair Isaac has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LPL Financial Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LPL Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fair Isaac and LPL Financial

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

The idea behind Fair Isaac and LPL Financial Holdings 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.