Correlation Between Fortinet and Corpay

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

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

Diversification Opportunities for Fortinet and Corpay

0.83

Correlation Coefficient

Fortinet  Corpay

Very poor diversification

The 3 months correlation between Fortinet and Corpay is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Corpay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corpay 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 Corpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corpay Inc has no effect on the direction of Fortinet i.e., Fortinet and Corpay go up and down completely randomly.

Pair Corralation between Fortinet and Corpay

Given the investment horizon of 90 days Fortinet is expected to generate 1.42 times more return on investment than Corpay. However, Fortinet is 1.42 times more volatile than Corpay Inc. It trades about 0.17 of its potential returns per unit of risk. Corpay Inc is currently generating about -0.01 per unit of risk. If you would invest  8,244  in Fortinet on September 22, 2024 and sell it today you would earn a total of  1,475  from holding Fortinet or generate 17.89% return on investment over 90 days.

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

Fortinet  vs.  Corpay Inc

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. In spite of comparatively unsteady basic indicators, Fortinet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Corpay Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corpay Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Corpay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fortinet and Corpay

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

The idea behind Fortinet and Corpay 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.