Correlation Between Fortinet and Microsoft Corp

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

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

Diversification Opportunities for Fortinet and Microsoft Corp

0.86
  Correlation Coefficient
Fortinet
Microsoft Corp

Very poor diversification

The 3 months correlation between Fortinet and Microsoft is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Microsoft Corp in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Microsoft Corp and Fortinet 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 Fortinet are associated (or correlated) with Microsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft Corp has no effect on the direction of Fortinet i.e., Fortinet and Microsoft Corp go up and down completely randomly.

Pair Corralation between Fortinet and Microsoft Corp

Given the investment horizon of 90 days Fortinet is expected to generate 7.16 times less return on investment than Microsoft Corp. In addition to that, Fortinet is 1.8 times more volatile than Microsoft Corp. It trades about 0.01 of its total potential returns per unit of risk. Microsoft Corp is currently generating about 0.12 per unit of volatility. If you would invest  30,018  in Microsoft Corp on September 4, 2021 and sell it today you would earn a total of  2,931  from holding Microsoft Corp or generate 9.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Fortinet  vs.  Microsoft Corp

 Performance (%) 
      Timeline 
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 comparatively stable basic indicators, Fortinet is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Fortinet Price Channel

Microsoft Corp 
Microsoft Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Microsoft Corp may actually be approaching a critical reversion point that can send shares even higher in January 2022.

Microsoft Price Channel

Fortinet and Microsoft Corp Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Fortinet and Microsoft Corp

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

Microsoft Corp

Pair trading matchups for Microsoft Corp

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 CEO Directory module to screen CEOs from public companies around the world.

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