Correlation Between Fastenal and OFX Group
Can any of the company-specific risk be diversified away by investing in both Fastenal and OFX Group 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 OFX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastenal Company and OFX Group Ltd, you can compare the effects of market volatilities on Fastenal and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and OFX Group.
Diversification Opportunities for Fastenal and OFX Group
Weak diversification
The 3 months correlation between Fastenal and OFX is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Fastenal i.e., Fastenal and OFX Group go up and down completely randomly.
Pair Corralation between Fastenal and OFX Group
Given the investment horizon of 90 days Fastenal Company is expected to generate 0.1 times more return on investment than OFX Group. However, Fastenal Company is 10.01 times less risky than OFX Group. It trades about -0.61 of its potential returns per unit of risk. OFX Group Ltd is currently generating about -0.22 per unit of risk. If you would invest 8,375 in Fastenal Company on September 24, 2024 and sell it today you would lose (927.00) from holding Fastenal Company or give up 11.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fastenal Company vs. OFX Group Ltd
Performance |
| Timeline |
| Fastenal |
| OFX Group |
Fastenal and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fastenal and OFX Group
The main advantage of trading using opposite Fastenal and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group's long position.| Fastenal vs. SiteOne Landscape Supply | Fastenal vs. Ferguson Plc | Fastenal vs. WW Grainger | Fastenal vs. Pool Corporation |
| OFX Group vs. Watsco Inc | OFX Group vs. Fastenal Company | OFX Group vs. SiteOne Landscape Supply | OFX Group vs. Ferguson Plc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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