Correlation Between Shift4 Payments and Fortinet

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Can any of the company-specific risk be diversified away by investing in both Shift4 Payments 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 Shift4 Payments and Fortinet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shift4 Payments and Fortinet, you can compare the effects of market volatilities on Shift4 Payments 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 Shift4 Payments with a short position of Fortinet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shift4 Payments and Fortinet.

Diversification Opportunities for Shift4 Payments and Fortinet

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Shift4 and Fortinet is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shift4 Payments and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Shift4 Payments 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 Shift4 Payments 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 Shift4 Payments i.e., Shift4 Payments and Fortinet go up and down completely randomly.

Pair Corralation between Shift4 Payments and Fortinet

Given the investment horizon of 90 days Shift4 Payments is expected to under-perform the Fortinet. In addition to that, Shift4 Payments is 1.46 times more volatile than Fortinet. It trades about -0.05 of its total potential returns per unit of risk. Fortinet is currently generating about 0.0 per unit of volatility. If you would invest  6,280  in Fortinet on April 6, 2022 and sell it today you would lose (543.00)  from holding Fortinet or give up 8.65% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Shift4 Payments  vs.  Fortinet

 Performance (%) 
      Timeline 
Shift4 Payments 
Shift4 Performance
0 of 100
Over the last 90 days Shift4 Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in August 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Shift4 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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Structure and Payout Changes

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

Fortinet Price Channel

Shift4 Payments and Fortinet Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Shift4 Payments and Fortinet

The main advantage of trading using opposite Shift4 Payments and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shift4 Payments 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 Shift4 Payments 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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