Correlation Between Zoom Video and Fortinet
Can any of the company-specific risk be diversified away by investing in both Zoom Video and Fortinet 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 Zoom Video and Fortinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zoom Video Communications and Fortinet, you can compare the effects of market volatilities on Zoom Video and Fortinet 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 Zoom Video with a short position of Fortinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Fortinet.
Diversification Opportunities for Zoom Video and Fortinet
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Zoom and Fortinet is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Zoom Video 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 Zoom Video Communications are associated (or correlated) with Fortinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortinet has no effect on the direction of Zoom Video i.e., Zoom Video and Fortinet go up and down completely randomly.
Pair Corralation between Zoom Video and Fortinet
Assuming the 90 days trading horizon Zoom Video is expected to generate 1.62 times less return on investment than Fortinet. But when comparing it to its historical volatility, Zoom Video Communications is 1.11 times less risky than Fortinet. It trades about 0.07 of its potential returns per unit of risk. Fortinet is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 14,530 in Fortinet on September 12, 2024 and sell it today you would earn a total of 14,963 from holding Fortinet or generate 102.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Zoom Video Communications vs. Fortinet
Performance |
| Timeline |
| Zoom Video Communications |
| Fortinet |
Zoom Video and Fortinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zoom Video and Fortinet
The main advantage of trading using opposite Zoom Video and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video position performs unexpectedly, Fortinet 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 Fortinet will offset losses from the drop in Fortinet's long position.| Zoom Video vs. Take Two Interactive Software | Zoom Video vs. Warner Music Group | Zoom Video vs. Electronic Arts | Zoom Video vs. Tyson Foods |
| Fortinet vs. Telecomunicaes Brasileiras SA | Fortinet vs. Charter Communications | Fortinet vs. Sumitomo Mitsui Financial | Fortinet vs. Zoom Video Communications |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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