Correlation Between Core Main and Fastenal
Can any of the company-specific risk be diversified away by investing in both Core Main 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 Core Main and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Core Main and Fastenal Company, you can compare the effects of market volatilities on Core Main 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 Core Main with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Core Main and Fastenal.
Diversification Opportunities for Core Main and Fastenal
Significant diversification
The 3 months correlation between Core and Fastenal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Core Main and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Core Main 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 Core Main 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 Core Main i.e., Core Main and Fastenal go up and down completely randomly.
Pair Corralation between Core Main and Fastenal
Considering the 90-day investment horizon Core Main is expected to generate 1.2 times less return on investment than Fastenal. In addition to that, Core Main is 1.67 times more volatile than Fastenal Company. It trades about 0.05 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.1 per unit of volatility. If you would invest 5,911 in Fastenal Company on August 27, 2024 and sell it today you would earn a total of 2,397 from holding Fastenal Company or generate 40.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Core Main vs. Fastenal Company
Performance |
| Timeline |
| Core Main |
| Fastenal |
Core Main and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Core Main and Fastenal
The main advantage of trading using opposite Core Main and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Main 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.| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx Holdings |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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