Correlation Between Toromont Industries and Fastenal

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

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

Diversification Opportunities for Toromont Industries and Fastenal

0.91

Correlation Coefficient

Toromont Industries  Fastenal

Almost no diversification

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

Pair Corralation between Toromont Industries and Fastenal

Assuming the 90 days horizon Toromont Industries is expected to generate 0.95 times more return on investment than Fastenal. However, Toromont Industries is 1.06 times less risky than Fastenal. It trades about 0.23 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.16 per unit of risk. If you would invest  7,417  in Toromont Industries on May 16, 2025 and sell it today you would earn a total of  1,383  from holding Toromont Industries or generate 18.65% return on investment over 90 days.

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

Toromont Industries  vs.  Fastenal Company

Toromont Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Toromont Industries are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Toromont Industries reported solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady basic indicators, Fastenal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Toromont Industries and Fastenal

The main advantage of trading using opposite Toromont Industries and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toromont Industries 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 Toromont Industries 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.