Correlation Between Fortinet and Copper

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

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

Diversification Opportunities for Fortinet and Copper

0.23

Correlation Coefficient

Fortinet  Copper

Modest diversification

The 3 months correlation between Fortinet and Copper is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 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 Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper has no effect on the direction of Fortinet i.e., Fortinet and Copper go up and down completely randomly.

Pair Corralation between Fortinet and Copper

Given the investment horizon of 90 days Fortinet is expected to generate 3.9 times less return on investment than Copper. In addition to that, Fortinet is 1.26 times more volatile than Copper. It trades about 0.05 of its total potential returns per unit of risk. Copper is currently generating about 0.25 per unit of volatility. If you would invest  409.00  in Copper on December 29, 2024 and sell it today you would earn a total of  102.00  from holding Copper or generate 24.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.85%
Values	Daily Returns

Fortinet  vs.  Copper

Fortinet

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 3 (%) 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.

Copper

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Copper are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Copper exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fortinet and Copper

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

The idea behind Fortinet and Copper 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.