Correlation Between Fastenal and Global Industrial

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

By analyzing existing cross correlation between Fastenal Company and Global Industrial Co, you can compare the effects of market volatilities on Fastenal and Global Industrial 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 Global Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Global Industrial.

Diversification Opportunities for Fastenal and Global Industrial

-0.31

Correlation Coefficient

Fastenal  Global Industrial

Very good diversification

The 3 months correlation between Fastenal and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Global Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Industrial 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 Global Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Industrial has no effect on the direction of Fastenal i.e., Fastenal and Global Industrial go up and down completely randomly.

Pair Corralation between Fastenal and Global Industrial

Given the investment horizon of 90 days Fastenal Company is expected to generate 0.79 times more return on investment than Global Industrial. However, Fastenal Company is 1.27 times less risky than Global Industrial. It trades about 0.11 of its potential returns per unit of risk. Global Industrial Co is currently generating about -0.07 per unit of risk. If you would invest  7,151  in Fastenal Company on December 29, 2024 and sell it today you would earn a total of  622.00  from holding Fastenal Company or generate 8.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fastenal Company  vs.  Global Industrial Co

Fastenal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fastenal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Global Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Fastenal and Global Industrial

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

The idea behind Fastenal Company and Global Industrial Co 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.