Correlation Between Fortinet and Soybean Meal

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

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

Diversification Opportunities for Fortinet and Soybean Meal

-0.18

Correlation Coefficient

Fortinet  Soybean Meal

Good diversification

The 3 months correlation between Fortinet and Soybean is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Soybean Meal Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soybean Meal Futures 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 Soybean Meal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soybean Meal Futures has no effect on the direction of Fortinet i.e., Fortinet and Soybean Meal go up and down completely randomly.

Pair Corralation between Fortinet and Soybean Meal

Given the investment horizon of 90 days Fortinet is expected to generate 1.19 times more return on investment than Soybean Meal. However, Fortinet is 1.19 times more volatile than Soybean Meal Futures. It trades about 0.02 of its potential returns per unit of risk. Soybean Meal Futures is currently generating about -0.05 per unit of risk. If you would invest  9,513  in Fortinet on December 30, 2024 and sell it today you would earn a total of  147.00  from holding Fortinet or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Fortinet  vs.  Soybean Meal Futures

Fortinet

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 1 (%) 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.

Soybean Meal Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Soybean Meal Futures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Soybean Meal is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fortinet and Soybean Meal

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

The idea behind Fortinet and Soybean Meal Futures 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.