Correlation Between Banco Comercial and Fortinet

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Can any of the company-specific risk be diversified away by investing in both Banco Comercial 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 Banco Comercial and Fortinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Comercial Portugues and Fortinet, you can compare the effects of market volatilities on Banco Comercial 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 Banco Comercial with a short position of Fortinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Comercial and Fortinet.

Diversification Opportunities for Banco Comercial and Fortinet

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Banco and Fortinet is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Banco Comercial Portugues and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Banco Comercial 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 Banco Comercial Portugues 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 Banco Comercial i.e., Banco Comercial and Fortinet go up and down completely randomly.

Pair Corralation between Banco Comercial and Fortinet

Assuming the 90 days trading horizon Banco Comercial Portugues is expected to generate 1.49 times more return on investment than Fortinet. However, Banco Comercial is 1.49 times more volatile than Fortinet. It trades about 0.2 of its potential returns per unit of risk. Fortinet is currently generating about -0.1 per unit of risk. If you would invest  27.00  in Banco Comercial Portugues on December 29, 2023 and sell it today you would earn a total of  3.00  from holding Banco Comercial Portugues or generate 11.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Banco Comercial Portugues  vs.  Fortinet

 Performance 
       Timeline  
Banco Comercial Portugues 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Banco Comercial Portugues are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Banco Comercial may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Fortinet 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fortinet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Banco Comercial and Fortinet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Banco Comercial and Fortinet

The main advantage of trading using opposite Banco Comercial and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Comercial 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 Banco Comercial Portugues 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.
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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