Correlation Between Fortinet and Cellnex Telecom

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

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

Diversification Opportunities for Fortinet and Cellnex Telecom

-0.78

Correlation Coefficient

Fortinet  Cellnex Telecom

Pay attention - limited upside

The 3 months correlation between Fortinet and Cellnex is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Cellnex Telecom SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellnex Telecom SA 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 Cellnex Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellnex Telecom SA has no effect on the direction of Fortinet i.e., Fortinet and Cellnex Telecom go up and down completely randomly.

Pair Corralation between Fortinet and Cellnex Telecom

Given the investment horizon of 90 days Fortinet is expected to generate 1.29 times more return on investment than Cellnex Telecom. However, Fortinet is 1.29 times more volatile than Cellnex Telecom SA. It trades about 0.19 of its potential returns per unit of risk. Cellnex Telecom SA is currently generating about -0.12 per unit of risk. If you would invest  7,664  in Fortinet on September 11, 2024 and sell it today you would earn a total of  2,049  from holding Fortinet or generate 26.74% return on investment over 90 days.

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

Fortinet  vs.  Cellnex Telecom SA

Fortinet

Risk-Adjusted Performance

14 of 100

Good

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

Cellnex Telecom SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellnex Telecom SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Fortinet and Cellnex Telecom

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

The idea behind Fortinet and Cellnex Telecom SA 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.