Correlation Between SiteOne Landscape and Fastenal
Can any of the company-specific risk be diversified away by investing in both SiteOne Landscape 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 SiteOne Landscape and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SiteOne Landscape Supply and Fastenal Company, you can compare the effects of market volatilities on SiteOne Landscape 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 SiteOne Landscape with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SiteOne Landscape and Fastenal.
Diversification Opportunities for SiteOne Landscape and Fastenal
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SiteOne and Fastenal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SiteOne Landscape Supply and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and SiteOne Landscape 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 SiteOne Landscape Supply 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 SiteOne Landscape i.e., SiteOne Landscape and Fastenal go up and down completely randomly.
Pair Corralation between SiteOne Landscape and Fastenal
Given the investment horizon of 90 days SiteOne Landscape is expected to generate 1.53 times less return on investment than Fastenal. In addition to that, SiteOne Landscape is 1.71 times more volatile than Fastenal Company. It trades about 0.03 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.09 per unit of volatility. If you would invest 4,828 in Fastenal Company on August 30, 2024 and sell it today you would earn a total of 3,543 from holding Fastenal Company or generate 73.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SiteOne Landscape Supply vs. Fastenal Company
Performance |
| Timeline |
| SiteOne Landscape Supply |
| Fastenal |
SiteOne Landscape and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SiteOne Landscape and Fastenal
The main advantage of trading using opposite SiteOne Landscape and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiteOne Landscape 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.| SiteOne Landscape vs. DXP Enterprises | SiteOne Landscape vs. Applied Industrial Technologies | SiteOne Landscape vs. Ferguson Plc | SiteOne Landscape vs. Global Industrial Co |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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