Correlation Between Fortinet and Park City

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

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

Diversification Opportunities for Fortinet and Park City

0.88

Correlation Coefficient

Fortinet  Park City

Very poor diversification

The 3 months correlation between Fortinet and Park is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Park City Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park City Group 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 Park City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park City Group has no effect on the direction of Fortinet i.e., Fortinet and Park City go up and down completely randomly.

Pair Corralation between Fortinet and Park City

Assuming the 90 days horizon Fortinet is expected to generate 0.73 times more return on investment than Park City. However, Fortinet is 1.36 times less risky than Park City. It trades about 0.17 of its potential returns per unit of risk. Park City Group is currently generating about 0.1 per unit of risk. If you would invest  7,427  in Fortinet on October 24, 2024 and sell it today you would earn a total of  1,719  from holding Fortinet or generate 23.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Fortinet  vs.  Park City Group

Fortinet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortinet reported solid returns over the last few months and may actually be approaching a breakup point.

Park City Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park City Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Park City reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortinet and Park City

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

The idea behind Fortinet and Park City Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.