Correlation Between Fortinet and Cadence Design
Can any of the company-specific risk be diversified away by investing in both Fortinet and Cadence Design 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 Cadence Design into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and Cadence Design Systems, you can compare the effects of market volatilities on Fortinet and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Cadence Design.
Diversification Opportunities for Fortinet and Cadence Design
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortinet and Cadence is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems 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 Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of Fortinet i.e., Fortinet and Cadence Design go up and down completely randomly.
Pair Corralation between Fortinet and Cadence Design
Assuming the 90 days horizon Fortinet is expected to generate 0.82 times more return on investment than Cadence Design. However, Fortinet is 1.23 times less risky than Cadence Design. It trades about -0.32 of its potential returns per unit of risk. Cadence Design Systems is currently generating about -0.55 per unit of risk. If you would invest 10,688 in Fortinet on December 11, 2024 and sell it today you would lose (1,326) from holding Fortinet or give up 12.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortinet vs. Cadence Design Systems
Performance |
| Timeline |
| Fortinet |
| Cadence Design Systems |
Fortinet and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and Cadence Design
The main advantage of trading using opposite Fortinet and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| Fortinet vs. FLOW TRADERS LTD | Fortinet vs. Tradeweb Markets | Fortinet vs. Indutrade AB | Fortinet vs. Fast Retailing Co |
| Cadence Design vs. CHINA TONTINE WINES | Cadence Design vs. VIVA WINE GROUP | Cadence Design vs. Spirent Communications plc | Cadence Design vs. USU Software AG |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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