Correlation Between Fortinet and A1KA34
Can any of the company-specific risk be diversified away by investing in both Fortinet and A1KA34 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 A1KA34 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and A1KA34, you can compare the effects of market volatilities on Fortinet and A1KA34 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 A1KA34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and A1KA34.
Diversification Opportunities for Fortinet and A1KA34
Significant diversification
The 3 months correlation between Fortinet and A1KA34 is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and A1KA34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1KA34 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 A1KA34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1KA34 has no effect on the direction of Fortinet i.e., Fortinet and A1KA34 go up and down completely randomly.
Pair Corralation between Fortinet and A1KA34
Assuming the 90 days trading horizon Fortinet is expected to generate 2.46 times less return on investment than A1KA34. But when comparing it to its historical volatility, Fortinet is 1.44 times less risky than A1KA34. It trades about 0.15 of its potential returns per unit of risk. A1KA34 is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,348 in A1KA34 on September 12, 2024 and sell it today you would earn a total of 667.00 from holding A1KA34 or generate 15.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortinet vs. A1KA34
Performance |
| Timeline |
| Fortinet |
| A1KA34 |
Fortinet and A1KA34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and A1KA34
The main advantage of trading using opposite Fortinet and A1KA34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, A1KA34 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 A1KA34 will offset losses from the drop in A1KA34's long position.| Fortinet vs. Telecomunicaes Brasileiras SA | Fortinet vs. Charter Communications | Fortinet vs. Sumitomo Mitsui Financial | Fortinet vs. Zoom Video Communications |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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