Correlation Between Fortinet and Nexans SA
Can any of the company-specific risk be diversified away by investing in both Fortinet and Nexans SA 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 Nexans SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and Nexans SA, you can compare the effects of market volatilities on Fortinet and Nexans SA 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 Nexans SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Nexans SA.
Diversification Opportunities for Fortinet and Nexans SA
Pay attention - limited upside
The 3 months correlation between Fortinet and Nexans is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Nexans SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexans SA 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 Nexans SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexans SA has no effect on the direction of Fortinet i.e., Fortinet and Nexans SA go up and down completely randomly.
Pair Corralation between Fortinet and Nexans SA
Given the investment horizon of 90 days Fortinet is expected to generate 0.59 times more return on investment than Nexans SA. However, Fortinet is 1.69 times less risky than Nexans SA. It trades about 0.04 of its potential returns per unit of risk. Nexans SA is currently generating about -0.34 per unit of risk. If you would invest 9,642 in Fortinet on October 23, 2024 and sell it today you would earn a total of 78.00 from holding Fortinet or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Fortinet vs. Nexans SA
Performance |
| Timeline |
| Fortinet |
| Nexans SA |
Fortinet and Nexans SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and Nexans SA
The main advantage of trading using opposite Fortinet and Nexans SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, Nexans SA 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 Nexans SA will offset losses from the drop in Nexans SA's long position.The idea behind Fortinet and Nexans SA 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.| Nexans SA vs. FREYR Battery SA | Nexans SA vs. nVent Electric PLC | Nexans SA vs. Hubbell | Nexans SA vs. Advanced Energy Industries |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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