Correlation Between Neinor Homes and Fastenal
Can any of the company-specific risk be diversified away by investing in both Neinor Homes 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 Neinor Homes and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neinor Homes SA and Fastenal Company, you can compare the effects of market volatilities on Neinor Homes 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 Neinor Homes with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and Fastenal.
Diversification Opportunities for Neinor Homes and Fastenal
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Neinor and Fastenal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Neinor Homes 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 Neinor Homes SA 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 Neinor Homes i.e., Neinor Homes and Fastenal go up and down completely randomly.
Pair Corralation between Neinor Homes and Fastenal
Assuming the 90 days trading horizon Neinor Homes SA is expected to generate 0.96 times more return on investment than Fastenal. However, Neinor Homes SA is 1.04 times less risky than Fastenal. It trades about 0.15 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.09 per unit of risk. If you would invest 1,581 in Neinor Homes SA on November 4, 2024 and sell it today you would earn a total of 93.00 from holding Neinor Homes SA or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neinor Homes SA vs. Fastenal Company
Performance |
| Timeline |
| Neinor Homes SA |
| Fastenal |
Neinor Homes and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neinor Homes and Fastenal
The main advantage of trading using opposite Neinor Homes and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neinor Homes 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.| Neinor Homes vs. China Communications Services | Neinor Homes vs. Transport International Holdings | Neinor Homes vs. COLUMBIA SPORTSWEAR | Neinor Homes vs. Zoom Video Communications |
| Fastenal vs. Hitachi Construction Machinery | Fastenal vs. AOI Electronics Co | Fastenal vs. China Railway Construction | Fastenal vs. STMicroelectronics NV |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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