Correlation Between Black Knight and Fortinet

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

Diversification Opportunities for Black Knight and Fortinet

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Black and Fortinet is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Black Knight 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 Black Knight 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 Black Knight i.e., Black Knight and Fortinet go up and down completely randomly.

Pair Corralation between Black Knight and Fortinet

Considering the 90-day investment horizon Black Knight is expected to under-perform the Fortinet. But the stock apears to be less risky and, when comparing its historical volatility, Black Knight is 1.89 times less risky than Fortinet. The stock trades about -0.12 of its potential returns per unit of risk. The Fortinet is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  5,939  in Fortinet on April 5, 2022 and sell it today you would lose (202.00)  from holding Fortinet or give up 3.4% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Black Knight  vs.  Fortinet

 Performance (%) 
      Timeline 
Black Knight 
Black Performance
0 of 100
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Black Price Channel

Fortinet 
Fortinet Performance
0 of 100
Over the last 90 days Fortinet 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 August 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Structure and Payout Changes

Last Split Factor
5:1
Last Split Date
2022-06-23

Fortinet Price Channel

Black Knight and Fortinet Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Black Knight and Fortinet

The main advantage of trading using opposite Black Knight and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Knight 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 Black Knight 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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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