Correlation Between Fortinet and Life On

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Can any of the company-specific risk be diversified away by investing in both Fortinet and Life On 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 Fortinet and Life On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and Life On Earth, you can compare the effects of market volatilities on Fortinet and Life On 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 Fortinet with a short position of Life On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Life On.

Diversification Opportunities for Fortinet and Life On

FortinetLifeDiversified AwayFortinetLifeDiversified Away100%
-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between Fortinet and Life is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Life On Earth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life On Earth and Fortinet 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 Fortinet are associated (or correlated) with Life On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life On Earth has no effect on the direction of Fortinet i.e., Fortinet and Life On go up and down completely randomly.

Pair Corralation between Fortinet and Life On

If you would invest  7,501  in Fortinet on September 13, 2024 and sell it today you would earn a total of  2,303  from holding Fortinet or generate 30.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy1.59%
ValuesDaily Returns

Fortinet  vs.  Life On Earth

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -20-100102030
JavaScript chart by amCharts 3.21.15FTNT LFER
       Timeline  
Fortinet 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fortinet unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec7580859095100
Life On Earth 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Life On Earth has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Life On is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Fortinet and Life On Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.27-4.69-3.12-1.550.01.743.475.216.95 0.020.040.060.08
JavaScript chart by amCharts 3.21.15FTNT LFER
       Returns  

Pair Trading with Fortinet and Life On

The main advantage of trading using opposite Fortinet and Life On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, Life On 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 Life On will offset losses from the drop in Life On's long position.
The idea behind Fortinet and Life On Earth 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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