Correlation Between Fastenal and Ferguson Plc

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

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

Diversification Opportunities for Fastenal and Ferguson Plc

0.59

Correlation Coefficient

Fastenal  Ferguson Plc

Very weak diversification

The 3 months correlation between Fastenal and Ferguson is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Ferguson Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferguson Plc 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 Ferguson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferguson Plc has no effect on the direction of Fastenal i.e., Fastenal and Ferguson Plc go up and down completely randomly.

Pair Corralation between Fastenal and Ferguson Plc

Given the investment horizon of 90 days Fastenal Company is expected to generate 0.92 times more return on investment than Ferguson Plc. However, Fastenal Company is 1.08 times less risky than Ferguson Plc. It trades about 0.1 of its potential returns per unit of risk. Ferguson Plc is currently generating about 0.05 per unit of risk. If you would invest  3,679  in Fastenal Company on March 1, 2025 and sell it today you would earn a total of  441.00  from holding Fastenal Company or generate 11.99% return on investment over 90 days.

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

Fastenal Company  vs.  Ferguson Plc

Fastenal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fastenal unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ferguson Plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ferguson Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Ferguson Plc may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Fastenal and Ferguson Plc

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

The idea behind Fastenal Company and Ferguson Plc 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.