Correlation Between Zscaler and Fortinet
Can any of the company-specific risk be diversified away by investing in both Zscaler 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 Zscaler and Fortinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zscaler and Fortinet, you can compare the effects of market volatilities on Zscaler 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 Zscaler with a short position of Fortinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zscaler and Fortinet.
Diversification Opportunities for Zscaler and Fortinet
Poor diversification
The 3 months correlation between Zscaler and Fortinet is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Zscaler and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Zscaler 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 Zscaler 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 Zscaler i.e., Zscaler and Fortinet go up and down completely randomly.
Pair Corralation between Zscaler and Fortinet
Allowing for the 90-day total investment horizon Zscaler is expected to generate 1.24 times less return on investment than Fortinet. But when comparing it to its historical volatility, Zscaler is 1.5 times less risky than Fortinet. It trades about 0.28 of its potential returns per unit of risk. Fortinet is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 8,076 in Fortinet on August 28, 2024 and sell it today you would earn a total of 1,236 from holding Fortinet or generate 15.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zscaler vs. Fortinet
Performance |
| Timeline |
| Zscaler |
| Fortinet |
Zscaler and Fortinet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zscaler and Fortinet
The main advantage of trading using opposite Zscaler and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zscaler 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.| Zscaler vs. Palo Alto Networks | Zscaler vs. Cloudflare | Zscaler vs. Okta Inc | Zscaler 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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