Correlation Between JPMorgan Chase and Fortinet

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

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

Diversification Opportunities for JPMorgan Chase and Fortinet

0.52

Correlation Coefficient

JPMorgan Chase  Fortinet

Very weak diversification

The 3 months correlation between JPMorgan and Fortinet is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and JPMorgan Chase 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 JPMorgan Chase Co 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 JPMorgan Chase i.e., JPMorgan Chase and Fortinet go up and down completely randomly.

Pair Corralation between JPMorgan Chase and Fortinet

Considering the 90-day investment horizon JPMorgan Chase Co is expected to generate 0.54 times more return on investment than Fortinet. However, JPMorgan Chase Co is 1.85 times less risky than Fortinet. It trades about 0.07 of its potential returns per unit of risk. Fortinet is currently generating about 0.02 per unit of risk. If you would invest  11,354  in JPMorgan Chase Co on January 20, 2024 and sell it today you would earn a total of  6,771  from holding JPMorgan Chase Co or generate 59.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

JPMorgan Chase Co  vs.  Fortinet

JPMorgan Chase

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JPMorgan Chase Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, JPMorgan Chase may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Fortinet

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 JPMorgan Chase and Fortinet

The main advantage of trading using opposite JPMorgan Chase and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase 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 JPMorgan Chase Co 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.