Correlation Between Fortinet and Cloudflare

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

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

Diversification Opportunities for Fortinet and Cloudflare

0.6

Correlation Coefficient

Fortinet  Cloudflare

Poor diversification

The 3 months correlation between Fortinet and Cloudflare is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fortinet and Cloudflare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudflare 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 Cloudflare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudflare has no effect on the direction of Fortinet i.e., Fortinet and Cloudflare go up and down completely randomly.

Pair Corralation between Fortinet and Cloudflare

Given the investment horizon of 90 days Fortinet is expected to generate 0.56 times more return on investment than Cloudflare. However, Fortinet is 1.8 times less risky than Cloudflare. It trades about 0.02 of its potential returns per unit of risk. Cloudflare is currently generating about -0.01 per unit of risk. If you would invest  7,764  in Fortinet on August 24, 2025 and sell it today you would earn a total of  122.00  from holding Fortinet or generate 1.57% return on investment over 90 days.

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

Fortinet  vs.  Cloudflare

Fortinet

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortinet are ranked lower than 1 (%) 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.

Cloudflare

Risk-Adjusted Performance

Weakest

Over the last 90 days Cloudflare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Cloudflare is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fortinet and Cloudflare

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

The idea behind Fortinet and Cloudflare 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.