Correlation Between Fastenal and PACCAR

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

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

Diversification Opportunities for Fastenal and PACCAR

0.45

Correlation Coefficient

Fastenal  PACCAR

Very weak diversification

The 3 months correlation between Fastenal and PACCAR is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and PACCAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACCAR Inc 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 PACCAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACCAR Inc has no effect on the direction of Fastenal i.e., Fastenal and PACCAR go up and down completely randomly.

Pair Corralation between Fastenal and PACCAR

Given the investment horizon of 90 days Fastenal Company is expected to generate 0.89 times more return on investment than PACCAR. However, Fastenal Company is 1.12 times less risky than PACCAR. It trades about 0.06 of its potential returns per unit of risk. PACCAR Inc is currently generating about 0.03 per unit of risk. If you would invest  2,916  in Fastenal Company on July 26, 2025 and sell it today you would earn a total of  1,383  from holding Fastenal Company or generate 47.43% 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.  PACCAR Inc

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. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PACCAR Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days PACCAR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PACCAR is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Fastenal and PACCAR

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

The idea behind Fastenal Company and PACCAR Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.