Correlation Between Fastenal and WW Grainger

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

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

Diversification Opportunities for Fastenal and WW Grainger

0.12

Correlation Coefficient

Fastenal  WW Grainger

Average diversification

The 3 months correlation between Fastenal and GWW is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and WW Grainger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW Grainger 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 WW Grainger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW Grainger has no effect on the direction of Fastenal i.e., Fastenal and WW Grainger go up and down completely randomly.

Pair Corralation between Fastenal and WW Grainger

Assuming the 90 days horizon Fastenal Company is expected to generate 0.91 times more return on investment than WW Grainger. However, Fastenal Company is 1.1 times less risky than WW Grainger. It trades about 0.15 of its potential returns per unit of risk. WW Grainger is currently generating about 0.05 per unit of risk. If you would invest  3,476  in Fastenal Company on April 21, 2025 and sell it today you would earn a total of  463.00  from holding Fastenal Company or generate 13.32% return on investment over 90 days.

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

Fastenal Company  vs.  WW Grainger

Fastenal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fastenal reported solid returns over the last few months and may actually be approaching a breakup point.

WW Grainger

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WW Grainger are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WW Grainger is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Fastenal and WW Grainger

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

The idea behind Fastenal Company and WW Grainger 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.