Correlation Between Pfizer and Fortinet

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

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

Diversification Opportunities for Pfizer and Fortinet

-0.88

Correlation Coefficient

Pfizer  Fortinet

Pay attention - limited upside

The 3 months correlation between Pfizer and Fortinet is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Pfizer 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 Pfizer Inc are associated (or correlated) with Fortinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortinet has no effect on the direction of Pfizer i.e., Pfizer and Fortinet go up and down completely randomly.

Pair Corralation between Pfizer and Fortinet

Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the Fortinet. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.05 times less risky than Fortinet. The stock trades about -0.06 of its potential returns per unit of risk. The Fortinet is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9,718  in Fortinet on September 12, 2024 and sell it today you would lose (5.00) from holding Fortinet or give up 0.05% of portfolio value over 90 days.

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

Pfizer Inc  vs.  Fortinet

Pfizer Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pfizer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fortinet

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 16 (%) 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.

Pair Trading with Pfizer and Fortinet

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

The idea behind Pfizer Inc and Fortinet 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..