Correlation Between EVI Industries and Fastenal

Can any of the company-specific risk be diversified away by investing in both EVI Industries 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 EVI Industries and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EVI Industries and Fastenal Company, you can compare the effects of market volatilities on EVI Industries 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 EVI Industries with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVI Industries and Fastenal.

Diversification Opportunities for EVI Industries and Fastenal

0.35

Correlation Coefficient

EVI Industries  Fastenal

Weak diversification

The 3 months correlation between EVI and Fastenal is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding EVI Industries and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and EVI Industries 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 EVI Industries 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 EVI Industries i.e., EVI Industries and Fastenal go up and down completely randomly.

Pair Corralation between EVI Industries and Fastenal

Considering the 90-day investment horizon EVI Industries is expected to generate 2.54 times more return on investment than Fastenal. However, EVI Industries is 2.54 times more volatile than Fastenal Company. It trades about -0.16 of its potential returns per unit of risk. Fastenal Company is currently generating about -0.61 per unit of risk. If you would invest  1,846  in EVI Industries on October 6, 2024 and sell it today you would lose (161.00) from holding EVI Industries or give up 8.72% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EVI Industries  vs.  Fastenal Company

EVI Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVI Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Fastenal

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fastenal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with EVI Industries and Fastenal

The main advantage of trading using opposite EVI Industries and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVI Industries 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.

The idea behind EVI Industries and Fastenal Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.