Correlation Between Fastenal and Shenandoah Telecommunicatio

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

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

Diversification Opportunities for Fastenal and Shenandoah Telecommunicatio

0.46

Correlation Coefficient

Fastenal  Shenandoah Telecommunicatio

Very weak diversification

The 3 months correlation between Fastenal and Shenandoah is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio 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 Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Fastenal i.e., Fastenal and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between Fastenal and Shenandoah Telecommunicatio

Assuming the 90 days horizon Fastenal is expected to generate 1.21 times less return on investment than Shenandoah Telecommunicatio. But when comparing it to its historical volatility, Fastenal Company is 1.91 times less risky than Shenandoah Telecommunicatio. It trades about 0.15 of its potential returns per unit of risk. Shenandoah Telecommunications is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,120  in Shenandoah Telecommunications on April 22, 2025 and sell it today you would earn a total of  170.00  from holding Shenandoah Telecommunications or generate 15.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Fastenal Company  vs.  Shenandoah Telecommunications

Fastenal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 12 (%) 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.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shenandoah Telecommunicatio reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fastenal and Shenandoah Telecommunicatio

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

The idea behind Fastenal Company and Shenandoah Telecommunications 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.