Correlation Between EVI Industries and Fastenal
Can any of the company-specific risk be diversified away by investing in both EVI Industries 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 EVI Industries and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EVI Industries and Fastenal Company, you can compare the effects of market volatilities on EVI Industries 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 EVI Industries with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and Fastenal.
Diversification Opportunities for EVI Industries and Fastenal
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EVI and Fastenal is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and EVI Industries 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 EVI Industries 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 EVI Industries i.e., EVI Industries and Fastenal go up and down completely randomly.
Pair Corralation between EVI Industries and Fastenal
Considering the 90-day investment horizon EVI Industries is expected to under-perform the Fastenal. In addition to that, EVI Industries is 2.38 times more volatile than Fastenal Company. It trades about -0.03 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.24 per unit of volatility. If you would invest 7,554 in Fastenal Company on August 24, 2024 and sell it today you would earn a total of 682.00 from holding Fastenal Company or generate 9.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EVI Industries vs. Fastenal Company
Performance |
| Timeline |
| EVI Industries |
| Fastenal |
EVI Industries and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EVI Industries and Fastenal
The main advantage of trading using opposite EVI Industries and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries 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.| EVI Industries vs. DXP Enterprises | EVI Industries vs. Global Industrial Co | EVI Industries vs. Core Main | EVI Industries vs. Watsco Inc |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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