Correlation Between Palo Alto and Appgate

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

By analyzing existing cross correlation between Palo Alto Networks and Appgate, you can compare the effects of market volatilities on Palo Alto and Appgate 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 Palo Alto with a short position of Appgate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palo Alto and Appgate.

Diversification Opportunities for Palo Alto and Appgate

-0.78

Correlation Coefficient

Palo Alto  Appgate

Pay attention - limited upside

The 3 months correlation between Palo and Appgate is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Palo Alto Networks and Appgate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appgate and Palo Alto 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 Palo Alto Networks are associated (or correlated) with Appgate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appgate has no effect on the direction of Palo Alto i.e., Palo Alto and Appgate go up and down completely randomly.

Pair Corralation between Palo Alto and Appgate

If you would invest  38,700  in Palo Alto Networks on September 16, 2024 and sell it today you would earn a total of  612.00  from holding Palo Alto Networks or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

Palo Alto Networks  vs.  Appgate

Palo Alto Networks

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Palo Alto Networks are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Palo Alto showed solid returns over the last few months and may actually be approaching a breakup point.

Appgate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Appgate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Appgate is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Palo Alto and Appgate

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

The idea behind Palo Alto Networks and Appgate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.