Correlation Between AGF Management and Fastenal
Can any of the company-specific risk be diversified away by investing in both AGF Management 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 AGF Management and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGF Management Limited and Fastenal Company, you can compare the effects of market volatilities on AGF Management 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 AGF Management with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGF Management and Fastenal.
Diversification Opportunities for AGF Management and Fastenal
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGF and Fastenal is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and AGF Management 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 AGF Management Limited 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 AGF Management i.e., AGF Management and Fastenal go up and down completely randomly.
Pair Corralation between AGF Management and Fastenal
Assuming the 90 days horizon AGF Management Limited is expected to generate 1.38 times more return on investment than Fastenal. However, AGF Management is 1.38 times more volatile than Fastenal Company. It trades about 0.06 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.08 per unit of risk. If you would invest 477.00 in AGF Management Limited on October 29, 2024 and sell it today you would earn a total of 263.00 from holding AGF Management Limited or generate 55.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGF Management Limited vs. Fastenal Company
Performance |
| Timeline |
| AGF Management |
| Fastenal |
AGF Management and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGF Management and Fastenal
The main advantage of trading using opposite AGF Management and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGF Management 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.| AGF Management vs. CARSALESCOM | AGF Management vs. BURLINGTON STORES | AGF Management vs. Fast Retailing Co | AGF Management vs. Grupo Carso SAB |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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