Fastenal Company Stock Volatility

Using Fastenal Put Option to Manage Risk

Fastenal's PUT expiring on 2024-05-17

Fastenal Stock Volatility Analysis

Fastenal Projected Return Density Against Market

Given the investment horizon of 90 days the stock has the beta coefficient of 1.0028 . This usually indicates Fastenal Company market returns are related to returns on the market. As the market goes up or down, Fastenal is expected to follow. Fastenal Company has a negative alpha, implying that the risk taken by holding this instrument is not justified. The company is significantly underperforming the NYSE Composite. Fastenal's volatility is measured either by using standard deviation or beta. Standard deviation will reflect the average amount of how fastenal stock's price will differ from the mean after some time.To get its calculation, you should first determine the mean price during the specified period then subtract that from each price point.

What Drives a Fastenal Price Volatility?

Several factors can influence a stock's market volatility:

Industry

Specific events can influence volatility within a particular industry. For instance, a significant weather upheaval in a crucial oil-production site may cause oil prices to increase in the oil sector. The direct result will be the rise in the stock price of oil distribution companies. Similarly, any government regulation in a specific industry could negatively influence stock prices due to increased regulations on compliance that may impact the company's future earnings and growth.

Political and Economic environment

When governments make significant decisions regarding trade agreements, policies, and legislation regarding specific industries, they will influence stock prices. Everything from speeches to elections may influence investors, who can directly influence the stock prices in any particular industry. The prevailing economic situation also plays a significant role in stock prices. When the economy is doing well, investors will have a positive reaction and hence, better stock prices and vice versa.

The Company's Performance

Sometimes volatility will only affect an individual company. For example, a revolutionary product launch or strong earnings report may attract many investors to purchase the company. This positive attention will raise the company's stock price. In contrast, product recalls and data breaches may negatively influence a company's stock prices.

Fastenal Stock Risk Measures

Fastenal Stock Return Volatility

Fastenal historical daily return volatility represents how much of Fastenal stock's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. The firm inherits 1.3518% risk (volatility on return distribution) over the 90 days horizon. By contrast, NYSE Composite accepts 0.6372% volatility on return distribution over the 90 days horizon.

Volatility is a rate at which the price of Fastenal or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Fastenal may increase or decrease. In other words, similar to Fastenal's beta indicator, it measures the risk of Fastenal and helps estimate the fluctuations that may happen in a short period of time. So if prices of Fastenal fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.

Fastenal's stock volatility refers to the amount of uncertainty or risk involved with the size of changes in its stock's price. It is a statistical measure of the dispersion of returns on Fastenal Stock over a specified period of time, often expressed as the standard deviation of daily returns. In other words, it measures how much Fastenal's price varies over time.

The analysis of Fastenal's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Fastenal's investment and either accepting that risk or mitigating it. Along with some common measures of Fastenal stock's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.

Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential stocks, we recommend comparing similar stocks with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.

Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.

The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Fastenal as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Fastenal's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Fastenal's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Fastenal Company.

Check out Investing Opportunities to better understand how to build diversified portfolios, which includes a position in Fastenal Company. Also, note that the market value of any company could be tightly coupled with the direction of predictive economic indicators such as signals in state. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

When running Fastenal's price analysis, check to measure Fastenal's market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Fastenal is operating at the current time. Most of Fastenal's value examination focuses on studying past and present price action to predict the probability of Fastenal's future price movements. You can analyze the entity against its peers and the financial market as a whole to determine factors that move Fastenal's price. Additionally, you may evaluate how the addition of Fastenal to your portfolios can decrease your overall portfolio volatility.

Is Fastenal's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Fastenal. If investors know Fastenal will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Fastenal listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.

The market value of Fastenal is measured differently than its book value, which is the value of Fastenal that is recorded on the company's balance sheet. Investors also form their own opinion of Fastenal's value that differs from its market value or its book value, called intrinsic value, which is Fastenal's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Fastenal's market value can be influenced by many factors that don't directly affect Fastenal's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.

Please note, there is a significant difference between Fastenal's value and its price as these two are different measures arrived at by different means. Investors typically determine if Fastenal is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Fastenal's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.