Correlation Between Fortinet and Boeing
Can any of the company-specific risk be diversified away by investing in both Fortinet and Boeing 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 Boeing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and The Boeing, you can compare the effects of market volatilities on Fortinet and Boeing 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 Boeing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Boeing.
Diversification Opportunities for Fortinet and Boeing
Excellent diversification
The 3 months correlation between Fortinet and Boeing is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Fortinet i.e., Fortinet and Boeing go up and down completely randomly.
Pair Corralation between Fortinet and Boeing
Given the investment horizon of 90 days Fortinet is expected to generate 1.04 times more return on investment than Boeing. However, Fortinet is 1.04 times more volatile than The Boeing. It trades about 0.17 of its potential returns per unit of risk. The Boeing is currently generating about -0.02 per unit of risk. If you would invest 7,713 in Fortinet on September 3, 2024 and sell it today you would earn a total of 1,792 from holding Fortinet or generate 23.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortinet vs. The Boeing
Performance |
| Timeline |
| Fortinet |
| Boeing |
Fortinet and Boeing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and Boeing
The main advantage of trading using opposite Fortinet and Boeing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, Boeing 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 Boeing will offset losses from the drop in Boeing's long position.The idea behind Fortinet and The Boeing 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.| Boeing vs. Highway Holdings Limited | Boeing vs. QCR Holdings | Boeing vs. Partner Communications | Boeing vs. Acumen Pharmaceuticals |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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