Correlation Between Fastenal and Paysafe

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

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

Diversification Opportunities for Fastenal and Paysafe

0.55

Correlation Coefficient

Fastenal  Paysafe

Very weak diversification

The 3 months correlation between Fastenal and Paysafe is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Paysafe Ltd Wt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe Ltd Wt 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 Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe Ltd Wt has no effect on the direction of Fastenal i.e., Fastenal and Paysafe go up and down completely randomly.

Pair Corralation between Fastenal and Paysafe

Given the investment horizon of 90 days Fastenal Company is expected to under-perform the Paysafe. But the stock apears to be less risky and, when comparing its historical volatility, Fastenal Company is 6.87 times less risky than Paysafe. The stock trades about -0.66 of its potential returns per unit of risk. The Paysafe Ltd Wt is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Paysafe Ltd Wt on October 3, 2024 and sell it today you would lose (0.40) from holding Paysafe Ltd Wt or give up 13.33% of portfolio value over 90 days.

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

Fastenal Company  vs.  Paysafe Ltd Wt

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.

Paysafe Ltd Wt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paysafe Ltd Wt are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Paysafe unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fastenal and Paysafe

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

The idea behind Fastenal Company and Paysafe Ltd Wt 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .