Correlation Between Information Services and Fastenal

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

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

Diversification Opportunities for Information Services and Fastenal

-0.67

Correlation Coefficient

Information Services  Fastenal

Excellent diversification

The 3 months correlation between Information and Fastenal is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and Fastenal go up and down completely randomly.

Pair Corralation between Information Services and Fastenal

Assuming the 90 days horizon Information Services International Dentsu is expected to under-perform the Fastenal. In addition to that, Information Services is 1.24 times more volatile than Fastenal Company. It trades about -0.03 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.16 per unit of volatility. If you would invest  3,625  in Fastenal Company on May 16, 2025 and sell it today you would earn a total of  477.00  from holding Fastenal Company or generate 13.16% return on investment over 90 days.

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

Information Services Internati  vs.  Fastenal Company

Information Services

Risk-Adjusted Performance

Weakest

Over the last 90 days Information Services International Dentsu has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Information Services is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Information Services and Fastenal

The main advantage of trading using opposite Information Services and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services International Dentsu 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.