Correlation Between Appian Corp and Fortinet

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

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

Diversification Opportunities for Appian Corp and Fortinet

0.15

Correlation Coefficient

Appian Corp  Fortinet

Average diversification

The 3 months correlation between Appian and Fortinet is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Appian Corp 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 Appian Corp 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 Appian Corp i.e., Appian Corp and Fortinet go up and down completely randomly.

Pair Corralation between Appian Corp and Fortinet

Given the investment horizon of 90 days Appian Corp is expected to generate 1.62 times more return on investment than Fortinet. However, Appian Corp is 1.62 times more volatile than Fortinet. It trades about -0.04 of its potential returns per unit of risk. Fortinet is currently generating about -0.07 per unit of risk. If you would invest  3,775  in Appian Corp on January 26, 2024 and sell it today you would lose (109.00) from holding Appian Corp or give up 2.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Appian Corp  vs.  Fortinet

Appian Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Appian Corp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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 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.

Pair Trading with Appian Corp and Fortinet

The main advantage of trading using opposite Appian Corp and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appian Corp 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 Appian Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.