Correlation Between GreenPower and Fastenal
Can any of the company-specific risk be diversified away by investing in both GreenPower 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 GreenPower and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenPower Motor and Fastenal Company, you can compare the effects of market volatilities on GreenPower 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 GreenPower with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenPower and Fastenal.
Diversification Opportunities for GreenPower and Fastenal
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GreenPower and Fastenal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GreenPower Motor and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and GreenPower 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 GreenPower Motor 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 GreenPower i.e., GreenPower and Fastenal go up and down completely randomly.
Pair Corralation between GreenPower and Fastenal
Allowing for the 90-day total investment horizon GreenPower is expected to generate 3.96 times less return on investment than Fastenal. In addition to that, GreenPower is 2.64 times more volatile than Fastenal Company. It trades about 0.02 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.22 per unit of volatility. If you would invest 7,761 in Fastenal Company on August 30, 2024 and sell it today you would earn a total of 610.00 from holding Fastenal Company or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
GreenPower Motor vs. Fastenal Company
Performance |
| Timeline |
| GreenPower Motor |
| Fastenal |
GreenPower and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenPower and Fastenal
The main advantage of trading using opposite GreenPower and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenPower 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.| GreenPower vs. Hyster Yale Materials Handling | GreenPower vs. Columbus McKinnon | GreenPower vs. AGCO Corporation | GreenPower vs. Titan International |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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