Correlation Between Fastenal and SpareBank
Can any of the company-specific risk be diversified away by investing in both Fastenal and SpareBank 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 SpareBank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastenal Company and SpareBank 1 SR Bank, you can compare the effects of market volatilities on Fastenal and SpareBank 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 SpareBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and SpareBank.
Diversification Opportunities for Fastenal and SpareBank
Pay attention - limited upside
The 3 months correlation between Fastenal and SpareBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and SpareBank 1 SR Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpareBank 1 SR 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 SpareBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpareBank 1 SR has no effect on the direction of Fastenal i.e., Fastenal and SpareBank go up and down completely randomly.
Pair Corralation between Fastenal and SpareBank
Given the investment horizon of 90 days Fastenal is expected to generate 5.0 times less return on investment than SpareBank. But when comparing it to its historical volatility, Fastenal Company is 4.51 times less risky than SpareBank. It trades about 0.06 of its potential returns per unit of risk. SpareBank 1 SR Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 715.00 in SpareBank 1 SR Bank on September 25, 2024 and sell it today you would earn a total of 750.00 from holding SpareBank 1 SR Bank or generate 104.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 99.6% |
Values | Daily Returns |
Fastenal Company vs. SpareBank 1 SR Bank
Performance |
Timeline |
Fastenal |
SpareBank 1 SR |
Fastenal and SpareBank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fastenal and SpareBank
The main advantage of trading using opposite Fastenal and SpareBank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal position performs unexpectedly, SpareBank 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 SpareBank will offset losses from the drop in SpareBank's long position.Fastenal vs. SiteOne Landscape Supply | Fastenal vs. Ferguson Plc | Fastenal vs. WW Grainger | Fastenal vs. Pool Corporation |
SpareBank vs. Par Pacific Holdings | SpareBank vs. Radcom | SpareBank vs. Weibo Corp | SpareBank vs. ChargePoint Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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