Correlation Between Citigroup and Fastenal

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

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

Diversification Opportunities for Citigroup and Fastenal

0.91

Correlation Coefficient

Citigroup  Fastenal

Almost no diversification

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

Pair Corralation between Citigroup and Fastenal

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.15 times more return on investment than Fastenal. However, Citigroup is 1.15 times more volatile than Fastenal Company. It trades about 0.37 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.19 per unit of risk. If you would invest  6,784  in Citigroup on April 30, 2025 and sell it today you would earn a total of  2,664  from holding Citigroup or generate 39.27% return on investment over 90 days.

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

Citigroup  vs.  Fastenal Company

Citigroup

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Citigroup exhibited 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 14 (%) 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.

Pair Trading with Citigroup and Fastenal

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

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.