Correlation Between Boeing and Fastenal
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Fastenal Company, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Fastenal.
Diversification Opportunities for Boeing and Fastenal
Pay attention - limited upside
The 3 months correlation between Boeing and Fastenal is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Fastenal go up and down completely randomly.
Pair Corralation between Boeing and Fastenal
Allowing for the 90-day total investment horizon The Boeing is expected to generate 1.59 times more return on investment than Fastenal. However, Boeing is 1.59 times more volatile than Fastenal Company. It trades about 0.25 of its potential returns per unit of risk. Fastenal Company is currently generating about -0.13 per unit of risk. If you would invest 14,387 in The Boeing on November 18, 2024 and sell it today you would earn a total of 4,055 from holding The Boeing or generate 28.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Fastenal Company
Performance |
| Timeline |
| Boeing |
| Fastenal |
Boeing and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Fastenal
The main advantage of trading using opposite Boeing and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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.| Boeing vs. Raytheon Technologies Corp | Boeing vs. Northrop Grumman | Boeing vs. General Dynamics | Boeing vs. L3Harris Technologies |
| Fastenal vs. Applied Industrial Technologies | Fastenal vs. MSC Industrial Direct | Fastenal vs. Ferguson Plc | Fastenal vs. Watsco Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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