Correlation Between Fortinet and 278642AY9

Can any of the company-specific risk be diversified away by investing in both Fortinet and 278642AY9 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 278642AY9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortinet and EBAY INC, you can compare the effects of market volatilities on Fortinet and 278642AY9 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 278642AY9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and 278642AY9.

Diversification Opportunities for Fortinet and 278642AY9

-0.68

Correlation Coefficient

Fortinet  278642AY9

Excellent diversification

The 3 months correlation between Fortinet and 278642AY9 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and EBAY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 278642AY9 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 278642AY9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 278642AY9 has no effect on the direction of Fortinet i.e., Fortinet and 278642AY9 go up and down completely randomly.

Pair Corralation between Fortinet and 278642AY9

Given the investment horizon of 90 days Fortinet is expected to generate 0.77 times more return on investment than 278642AY9. However, Fortinet is 1.3 times less risky than 278642AY9. It trades about -0.02 of its potential returns per unit of risk. EBAY INC is currently generating about -0.05 per unit of risk. If you would invest  9,915  in Fortinet on September 13, 2024 and sell it today you would lose (111.00) from holding Fortinet or give up 1.12% of portfolio value over 90 days.

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

Fortinet  vs.  EBAY INC

Fortinet

Risk-Adjusted Performance

16 of 100

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.

278642AY9

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBAY INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 278642AY9 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fortinet and 278642AY9

The main advantage of trading using opposite Fortinet and 278642AY9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, 278642AY9 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 278642AY9 will offset losses from the drop in 278642AY9's long position.

The idea behind Fortinet and EBAY 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.