Correlation Between Fortinet and FedEx

Can any of the company-specific risk be diversified away by investing in both Fortinet and FedEx 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 FedEx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fortinet and FedEx, you can compare the effects of market volatilities on Fortinet and FedEx 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 FedEx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and FedEx.

Diversification Opportunities for Fortinet and FedEx

0.87

Correlation Coefficient

Fortinet  FedEx

Very poor diversification

The 3 months correlation between Fortinet and FedEx is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and FedEx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx 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 FedEx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx has no effect on the direction of Fortinet i.e., Fortinet and FedEx go up and down completely randomly.

Pair Corralation between Fortinet and FedEx

Assuming the 90 days trading horizon Fortinet is expected to generate 1.0 times more return on investment than FedEx. However, Fortinet is 1.0 times less risky than FedEx. It trades about 0.17 of its potential returns per unit of risk. FedEx is currently generating about -0.16 per unit of risk. If you would invest  28,056  in Fortinet on September 29, 2024 and sell it today you would earn a total of  1,574  from holding Fortinet or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

Fortinet  vs.  FedEx

Fortinet

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fortinet sustained solid returns over the last few months and may actually be approaching a breakup point.

FedEx

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, FedEx sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortinet and FedEx

The main advantage of trading using opposite Fortinet and FedEx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, FedEx 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 FedEx will offset losses from the drop in FedEx's long position.

The idea behind Fortinet and FedEx 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.