Correlation Between Fortinet and Katapult Holdings

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

By analyzing existing cross correlation between Fortinet and Katapult Holdings, you can compare the effects of market volatilities on Fortinet and Katapult Holdings 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 Katapult Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortinet and Katapult Holdings.

Diversification Opportunities for Fortinet and Katapult Holdings

-0.88

Correlation Coefficient

Fortinet  Katapult Holdings

Pay attention - limited upside

The 3 months correlation between Fortinet and Katapult is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Katapult Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katapult Holdings 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 Katapult Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katapult Holdings has no effect on the direction of Fortinet i.e., Fortinet and Katapult Holdings go up and down completely randomly.

Pair Corralation between Fortinet and Katapult Holdings

Given the investment horizon of 90 days Fortinet is expected to generate 0.44 times more return on investment than Katapult Holdings. However, Fortinet is 2.27 times less risky than Katapult Holdings. It trades about 0.07 of its potential returns per unit of risk. Katapult Holdings is currently generating about -0.02 per unit of risk. If you would invest  4,852  in Fortinet on September 24, 2024 and sell it today you would earn a total of  4,790  from holding Fortinet or generate 98.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fortinet  vs.  Katapult Holdings

Fortinet

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Fortinet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Katapult Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Katapult Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Fortinet and Katapult Holdings

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

The idea behind Fortinet and Katapult Holdings 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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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.