Correlation Between Applied Industrial and Fastenal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Applied Industrial 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 Applied Industrial and Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Industrial Technologies and Fastenal Company, you can compare the effects of market volatilities on Applied Industrial 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 Applied Industrial with a short position of Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Industrial and Fastenal.

Diversification Opportunities for Applied Industrial and Fastenal

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Applied and Fastenal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Applied Industrial Technologie and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Applied Industrial 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 Applied Industrial Technologies 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 Applied Industrial i.e., Applied Industrial and Fastenal go up and down completely randomly.

Pair Corralation between Applied Industrial and Fastenal

Considering the 90-day investment horizon Applied Industrial is expected to generate 1.15 times less return on investment than Fastenal. In addition to that, Applied Industrial is 1.26 times more volatile than Fastenal Company. It trades about 0.15 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.22 per unit of volatility. If you would invest  7,315  in Fastenal Company on December 29, 2023 and sell it today you would earn a total of  399.00  from holding Fastenal Company or generate 5.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Applied Industrial Technologie  vs.  Fastenal Company

 Performance 
       Timeline  
Applied Industrial 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Applied Industrial Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating forward indicators, Applied Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.
Fastenal 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Fastenal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Applied Industrial and Fastenal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Applied Industrial and Fastenal

The main advantage of trading using opposite Applied Industrial and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Industrial 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 Applied Industrial Technologies 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.
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Fundamental Analysis
View fundamental data based on most recent published financial statements
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Cryptocurrency Center
Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency
Content Syndication
Quickly integrate customizable finance content to your own investment portal
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Piotroski F Score
Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios