Correlation Between Fortinet and Okta

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

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

Diversification Opportunities for Fortinet and Okta

-0.27

Correlation Coefficient

Fortinet  Okta

Very good diversification

The 3 months correlation between Fortinet and Okta is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc 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 Okta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okta Inc has no effect on the direction of Fortinet i.e., Fortinet and Okta go up and down completely randomly.

Pair Corralation between Fortinet and Okta

Assuming the 90 days trading horizon Fortinet is expected to under-perform the Okta. But the stock apears to be less risky and, when comparing its historical volatility, Fortinet is 2.06 times less risky than Okta. The stock trades about -0.04 of its potential returns per unit of risk. The Okta Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,574  in Okta Inc on December 26, 2024 and sell it today you would earn a total of  741.00  from holding Okta Inc or generate 28.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Fortinet  vs.  Okta Inc

Fortinet

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortinet has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fortinet is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Okta Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward-looking signals, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortinet and Okta

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

The idea behind Fortinet and Okta Inc 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.