Correlation Between BII Railway and Fastenal

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

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

Diversification Opportunities for BII Railway and Fastenal

0.15

Correlation Coefficient

BII Railway  Fastenal

Average diversification

The 3 months correlation between BII and Fastenal is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and BII Railway 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 BII Railway Transportation 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 BII Railway i.e., BII Railway and Fastenal go up and down completely randomly.

Pair Corralation between BII Railway and Fastenal

Assuming the 90 days horizon BII Railway Transportation is expected to under-perform the Fastenal. In addition to that, BII Railway is 1.17 times more volatile than Fastenal Company. It trades about -0.19 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.01 per unit of volatility. If you would invest  3,539  in Fastenal Company on September 11, 2025 and sell it today you would earn a total of  6.00  from holding Fastenal Company or generate 0.17% return on investment over 90 days.

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

BII Railway Transportation  vs.  Fastenal Company

BII Railway Transpor

Risk-Adjusted Performance

Weakest

Over the last 90 days BII Railway Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Fastenal

Risk-Adjusted Performance

Weakest

Over the last 90 days Fastenal Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2026. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BII Railway and Fastenal

The main advantage of trading using opposite BII Railway and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway 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 BII Railway Transportation 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.