Correlation Between MSC Industrial and Fastenal

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

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

Diversification Opportunities for MSC Industrial and Fastenal

0.55

Correlation Coefficient

MSC Industrial  Fastenal

Very weak diversification

The 3 months correlation between MSC and Fastenal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding MSC Industrial Direct and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal and MSC Industrial 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 MSC Industrial Direct 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 MSC Industrial i.e., MSC Industrial and Fastenal go up and down completely randomly.

Pair Corralation between MSC Industrial and Fastenal

Considering the 90-day investment horizon MSC Industrial Direct is expected to generate 0.84 times more return on investment than Fastenal. However, MSC Industrial Direct is 1.19 times less risky than Fastenal. It trades about 0.0 of its potential returns per unit of risk. Fastenal Company is currently generating about -0.09 per unit of risk. If you would invest  8,761  in MSC Industrial Direct on July 23, 2025 and sell it today you would lose (68.00) from holding MSC Industrial Direct or give up 0.78% of portfolio value over 90 days.

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

MSC Industrial Direct  vs.  Fastenal Company

MSC Industrial Direct

Risk-Adjusted Performance

Weakest

Over the last 90 days MSC Industrial Direct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MSC Industrial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with MSC Industrial and Fastenal

The main advantage of trading using opposite MSC Industrial and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSC Industrial 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 MSC Industrial Direct 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.