Correlation Between Fortinet and Qualys

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

By analyzing existing cross correlation between Fortinet and Qualys Inc, you can compare the effects of market volatilities on Fortinet and Qualys 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 Qualys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Qualys.

Diversification Opportunities for Fortinet and Qualys

0.79

Correlation Coefficient

Fortinet  Qualys

Poor diversification

The 3 months correlation between Fortinet and Qualys is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Qualys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qualys Inc 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 Qualys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qualys Inc has no effect on the direction of Fortinet i.e., Fortinet and Qualys go up and down completely randomly.

Pair Corralation between Fortinet and Qualys

Given the investment horizon of 90 days Fortinet is expected to generate 1.13 times less return on investment than Qualys. But when comparing it to its historical volatility, Fortinet is 1.68 times less risky than Qualys. It trades about 0.17 of its potential returns per unit of risk. Qualys Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  12,517  in Qualys Inc on August 30, 2024 and sell it today you would earn a total of  2,951  from holding Qualys Inc or generate 23.58% return on investment over 90 days.

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

Fortinet  vs.  Qualys Inc

Fortinet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 13 (%) 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.

Qualys Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Qualys Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Qualys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortinet and Qualys

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

The idea behind Fortinet and Qualys Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.