Correlation Between Corporate Travel and Fastenal
Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Fastenal 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 Corporate Travel and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Travel Management and Fastenal Company, you can compare the effects of market volatilities on Corporate Travel and Fastenal 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 Corporate Travel with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Fastenal.
Diversification Opportunities for Corporate Travel and Fastenal
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporate and Fastenal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of Corporate Travel i.e., Corporate Travel and Fastenal go up and down completely randomly.
Pair Corralation between Corporate Travel and Fastenal
Assuming the 90 days trading horizon Corporate Travel Management is expected to under-perform the Fastenal. In addition to that, Corporate Travel is 1.78 times more volatile than Fastenal Company. It trades about -0.01 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.08 per unit of volatility. If you would invest 4,547 in Fastenal Company on October 29, 2024 and sell it today you would earn a total of 2,693 from holding Fastenal Company or generate 59.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Travel Management vs. Fastenal Company
Performance |
| Timeline |
| Corporate Travel Man |
| Fastenal |
Corporate Travel and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Travel and Fastenal
The main advantage of trading using opposite Corporate Travel and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Fastenal 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 Fastenal will offset losses from the drop in Fastenal's long position.| Corporate Travel vs. Addus HomeCare | Corporate Travel vs. MACOM Technology Solutions | Corporate Travel vs. OFFICE DEPOT | Corporate Travel vs. SCOTT TECHNOLOGY |
| Fastenal vs. VULCAN MATERIALS | Fastenal vs. Aristocrat Leisure Limited | Fastenal vs. AIR PRODCHEMICALS | Fastenal vs. PLAYWAY SA ZY 10 |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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