Correlation Between Fastenal and Dividend

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

By analyzing existing cross correlation between Fastenal Company and Dividend 15 Split, you can compare the effects of market volatilities on Fastenal and Dividend 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 Fastenal with a short position of Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Dividend.

Diversification Opportunities for Fastenal and Dividend

0.37

Correlation Coefficient

Fastenal  Dividend

Weak diversification

The 3 months correlation between Fastenal and Dividend is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Dividend 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dividend 15 Split and Fastenal 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 Fastenal Company are associated (or correlated) with Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dividend 15 Split has no effect on the direction of Fastenal i.e., Fastenal and Dividend go up and down completely randomly.

Pair Corralation between Fastenal and Dividend

Given the investment horizon of 90 days Fastenal Company is expected to generate 1.81 times more return on investment than Dividend. However, Fastenal is 1.81 times more volatile than Dividend 15 Split. It trades about 0.05 of its potential returns per unit of risk. Dividend 15 Split is currently generating about 0.09 per unit of risk. If you would invest  5,640  in Fastenal Company on October 4, 2024 and sell it today you would earn a total of  1,551  from holding Fastenal Company or generate 27.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.47%
Values	Daily Returns

Fastenal Company  vs.  Dividend 15 Split

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Dividend 15 Split

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dividend 15 Split are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Dividend may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fastenal and Dividend

The main advantage of trading using opposite Fastenal and Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal position performs unexpectedly, Dividend 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 Dividend will offset losses from the drop in Dividend's long position.

The idea behind Fastenal Company and Dividend 15 Split 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.