Correlation Between Fortinet and T.J. Maxx

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

Diversification Opportunities for Fortinet and T.J. Maxx

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Fortinet and T.J. Maxx is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Fortinet i.e., Fortinet and T.J. Maxx go up and down completely randomly.

Pair Corralation between Fortinet and T.J. Maxx

Given the investment horizon of 90 days Fortinet is expected to generate 1.62 times more return on investment than T.J. Maxx. However, Fortinet is 1.62 times more volatile than The TJX Companies. It trades about 0.22 of its potential returns per unit of risk. The TJX Companies is currently generating about 0.32 per unit of risk. If you would invest  4,710  in Fortinet on September 5, 2022 and sell it today you would earn a total of  651.00  from holding Fortinet or generate 13.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Fortinet  vs.  The TJX Companies

 Performance (%) 
       Timeline  
Fortinet 
Fortinet Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Fortinet may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Fortinet Price Channel

TJX Companies 
T.J. Maxx Performance
16 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in The TJX Companies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, T.J. Maxx showed solid returns over the last few months and may actually be approaching a breakup point.

T.J. Maxx Price Channel

Fortinet and T.J. Maxx Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fortinet and T.J. Maxx

The main advantage of trading using opposite Fortinet and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortinet position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.
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The idea behind Fortinet and The TJX Companies 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.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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