Correlation Between Fastenal and Core Main
Can any of the company-specific risk be diversified away by investing in both Fastenal and Core Main 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 Fastenal and Core Main into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastenal Company and Core Main, you can compare the effects of market volatilities on Fastenal and Core Main 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 Fastenal with a short position of Core Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Core Main.
Diversification Opportunities for Fastenal and Core Main
Good diversification
The 3 months correlation between Fastenal and Core is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main and Fastenal 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 Fastenal Company are associated (or correlated) with Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of Fastenal i.e., Fastenal and Core Main go up and down completely randomly.
Pair Corralation between Fastenal and Core Main
Given the investment horizon of 90 days Fastenal is expected to generate 1.55 times less return on investment than Core Main. But when comparing it to its historical volatility, Fastenal Company is 1.53 times less risky than Core Main. It trades about 0.08 of its potential returns per unit of risk. Core Main is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,061 in Core Main on August 23, 2024 and sell it today you would earn a total of 2,396 from holding Core Main or generate 116.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fastenal Company vs. Core Main
Performance |
| Timeline |
| Fastenal |
| Core Main |
Fastenal and Core Main Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastenal and Core Main
The main advantage of trading using opposite Fastenal and Core Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal position performs unexpectedly, Core Main 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 Core Main will offset losses from the drop in Core Main's long position.| Fastenal vs. Applied Industrial Technologies | Fastenal vs. MSC Industrial Direct | Fastenal vs. Ferguson Plc | Fastenal vs. Watsco Inc |
| Core Main vs. Distribution Solutions Group | Core Main vs. Global Industrial Co | Core Main vs. Applied Industrial Technologies | Core Main vs. BlueLinx Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |