Correlation Between WW Grainger and Fastenal
Can any of the company-specific risk be diversified away by investing in both WW Grainger 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 WW Grainger and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WW Grainger and Fastenal Company, you can compare the effects of market volatilities on WW Grainger 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 WW Grainger with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of WW Grainger and Fastenal.
Diversification Opportunities for WW Grainger and Fastenal
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GWW and Fastenal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding WW Grainger and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and WW Grainger 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 WW Grainger 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 WW Grainger i.e., WW Grainger and Fastenal go up and down completely randomly.
Pair Corralation between WW Grainger and Fastenal
Considering the 90-day investment horizon WW Grainger is expected to under-perform the Fastenal. In addition to that, WW Grainger is 1.48 times more volatile than Fastenal Company. It trades about -0.25 of its total potential returns per unit of risk. Fastenal Company is currently generating about -0.05 per unit of volatility. If you would invest 7,564 in Fastenal Company on November 18, 2024 and sell it today you would lose (86.00) from holding Fastenal Company or give up 1.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WW Grainger vs. Fastenal Company
Performance |
| Timeline |
| WW Grainger |
| Fastenal |
WW Grainger and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WW Grainger and Fastenal
The main advantage of trading using opposite WW Grainger and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WW Grainger 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.| WW Grainger vs. Watsco Inc | WW Grainger vs. Pool Corporation | WW Grainger vs. MSC Industrial Direct | WW Grainger vs. Applied Industrial 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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