Correlation Between Genpact and Fastenal
Can any of the company-specific risk be diversified away by investing in both Genpact 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 Genpact and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and Fastenal Company, you can compare the effects of market volatilities on Genpact 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 Genpact with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Fastenal.
Diversification Opportunities for Genpact and Fastenal
Poor diversification
The 3 months correlation between Genpact and Fastenal is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Genpact 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 Genpact Limited 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 Genpact i.e., Genpact and Fastenal go up and down completely randomly.
Pair Corralation between Genpact and Fastenal
Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.47 times more return on investment than Fastenal. However, Genpact is 1.47 times more volatile than Fastenal Company. It trades about 0.4 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.22 per unit of risk. If you would invest 3,819 in Genpact Limited on August 30, 2024 and sell it today you would earn a total of 863.00 from holding Genpact Limited or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genpact Limited vs. Fastenal Company
Performance |
| Timeline |
| Genpact Limited |
| Fastenal |
Genpact and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and Fastenal
The main advantage of trading using opposite Genpact and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact 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.| Genpact vs. WNS Holdings | Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. ExlService 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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