Correlation Between Fortinet and Walmart
Can any of the company-specific risk be diversified away by investing in both Fortinet and Walmart 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 Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortinet and Walmart, you can compare the effects of market volatilities on Fortinet and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Walmart.
Diversification Opportunities for Fortinet and Walmart
Very poor diversification
The 3 months correlation between Fortinet and Walmart is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Fortinet i.e., Fortinet and Walmart go up and down completely randomly.
Pair Corralation between Fortinet and Walmart
Given the investment horizon of 90 days Fortinet is expected to generate 1.95 times more return on investment than Walmart. However, Fortinet is 1.95 times more volatile than Walmart. It trades about 0.17 of its potential returns per unit of risk. Walmart is currently generating about 0.27 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortinet vs. Walmart
Performance |
| Timeline |
| Fortinet |
| Walmart |
Fortinet and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortinet and Walmart
The main advantage of trading using opposite Fortinet and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.The idea behind Fortinet and Walmart 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.| Walmart vs. Partner Communications | Walmart vs. Merck Company | Walmart vs. Western Midstream Partners | Walmart vs. Edgewise Therapeutics |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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