Correlation Between Fortinet and Five9
Can any of the company-specific risk be diversified away by investing in both Fortinet and Five9 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 Five9 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and Five9 Inc, you can compare the effects of market volatilities on Fortinet and Five9 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 Five9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Five9.
Diversification Opportunities for Fortinet and Five9
Very poor diversification
The 3 months correlation between Fortinet and Five9 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Five9 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five9 Inc 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 Five9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five9 Inc has no effect on the direction of Fortinet i.e., Fortinet and Five9 go up and down completely randomly.
Pair Corralation between Fortinet and Five9
Given the investment horizon of 90 days Fortinet is expected to generate 0.74 times more return on investment than Five9. However, Fortinet is 1.35 times less risky than Five9. It trades about 0.14 of its potential returns per unit of risk. Five9 Inc is currently generating about -0.02 per unit of risk. If you would invest 5,945 in Fortinet on August 25, 2024 and sell it today you would earn a total of 3,332 from holding Fortinet or generate 56.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortinet vs. Five9 Inc
Performance |
| Timeline |
| Fortinet |
| Five9 Inc |
Fortinet and Five9 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and Five9
The main advantage of trading using opposite Fortinet and Five9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, Five9 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 Five9 will offset losses from the drop in Five9's long position.The idea behind Fortinet and Five9 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.| Five9 vs. Palo Alto Networks | Five9 vs. Uipath Inc | Five9 vs. Block Inc | Five9 vs. Adobe Systems Incorporated |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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