Correlation Between SentinelOne and Fortinet

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

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

Diversification Opportunities for SentinelOne and Fortinet

0.76

Correlation Coefficient

SentinelOne  Fortinet

Poor diversification

The 3 months correlation between SentinelOne and Fortinet is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and Fortinet go up and down completely randomly.

Pair Corralation between SentinelOne and Fortinet

Taking into account the 90-day investment horizon SentinelOne is expected to under-perform the Fortinet. In addition to that, SentinelOne is 1.39 times more volatile than Fortinet. It trades about -0.14 of its total potential returns per unit of risk. Fortinet is currently generating about -0.09 per unit of volatility. If you would invest  6,779  in Fortinet on March 19, 2024 and sell it today you would lose (692.00) from holding Fortinet or give up 10.21% of portfolio value over 90 days.

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

SentinelOne  vs.  Fortinet

SentinelOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SentinelOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fortinet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortinet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SentinelOne and Fortinet

The main advantage of trading using opposite SentinelOne and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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 SentinelOne 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.