Correlation Between First Advantage and Fastenal
Can any of the company-specific risk be diversified away by investing in both First Advantage 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 First Advantage and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Advantage Corp and Fastenal Company, you can compare the effects of market volatilities on First Advantage 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 First Advantage with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Advantage and Fastenal.
Diversification Opportunities for First Advantage and Fastenal
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Fastenal is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and First Advantage 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 First Advantage Corp 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 First Advantage i.e., First Advantage and Fastenal go up and down completely randomly.
Pair Corralation between First Advantage and Fastenal
Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 1.65 times more return on investment than Fastenal. However, First Advantage is 1.65 times more volatile than Fastenal Company. It trades about 0.14 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.22 per unit of risk. If you would invest 1,788 in First Advantage Corp on August 30, 2024 and sell it today you would earn a total of 140.00 from holding First Advantage Corp or generate 7.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Advantage Corp vs. Fastenal Company
Performance |
| Timeline |
| First Advantage Corp |
| Fastenal |
First Advantage and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Advantage and Fastenal
The main advantage of trading using opposite First Advantage and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Advantage 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.| First Advantage vs. Manhattan Associates | First Advantage vs. Paycom Soft | First Advantage vs. Clearwater Analytics Holdings | First Advantage vs. Procore 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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