Correlation Between Fortinet and Assa Abloy

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

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

Diversification Opportunities for Fortinet and Assa Abloy

0.32

Correlation Coefficient

Fortinet  Assa Abloy

Weak diversification

The 3 months correlation between Fortinet and Assa is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Assa Abloy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assa Abloy AB 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 Assa Abloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assa Abloy AB has no effect on the direction of Fortinet i.e., Fortinet and Assa Abloy go up and down completely randomly.

Pair Corralation between Fortinet and Assa Abloy

Given the investment horizon of 90 days Fortinet is expected to generate 1.1 times more return on investment than Assa Abloy. However, Fortinet is 1.1 times more volatile than Assa Abloy AB. It trades about 0.03 of its potential returns per unit of risk. Assa Abloy AB is currently generating about 0.02 per unit of risk. If you would invest  9,729  in Fortinet on December 26, 2024 and sell it today you would earn a total of  250.00  from holding Fortinet or generate 2.57% return on investment over 90 days.

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

Fortinet  vs.  Assa Abloy AB

Fortinet

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fortinet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Assa Abloy AB

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Assa Abloy AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Assa Abloy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fortinet and Assa Abloy

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

The idea behind Fortinet and Assa Abloy AB 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..