Correlation Between Walmart and Fortinet

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

Diversification Opportunities for Walmart and Fortinet

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Walmart and Fortinet is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Walmart and Fortinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortinet and Walmart 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 Walmart 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 Walmart i.e., Walmart and Fortinet go up and down completely randomly.

Pair Corralation between Walmart and Fortinet

Considering the 90-day investment horizon Walmart is expected to generate 0.48 times more return on investment than Fortinet. However, Walmart is 2.08 times less risky than Fortinet. It trades about 0.14 of its potential returns per unit of risk. Fortinet is currently generating about 0.02 per unit of risk. If you would invest  11,894  in Walmart on May 15, 2022 and sell it today you would earn a total of  1,328  from holding Walmart or generate 11.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.67%
ValuesDaily Returns

Walmart  vs.  Fortinet

 Performance (%) 
       Timeline  
Walmart 
Walmart Performance
0 of 100
Over the last 90 days Walmart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Walmart 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 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.

Fortinet Price Channel

Walmart and Fortinet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Walmart and Fortinet

The main advantage of trading using opposite Walmart and Fortinet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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