Correlation Between Fastenal and Advance Auto

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Fastenal and Advance Auto 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 Advance Auto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fastenal Company and Advance Auto Parts, you can compare the effects of market volatilities on Fastenal and Advance Auto 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 Advance Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Advance Auto.

Diversification Opportunities for Fastenal and Advance Auto

0.93
  Correlation Coefficient

Almost no diversification

The 24 months correlation between Fastenal and Advance is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Advance Auto Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advance Auto Parts 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 Advance Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advance Auto Parts has no effect on the direction of Fastenal i.e., Fastenal and Advance Auto go up and down completely randomly.

Pair Corralation between Fastenal and Advance Auto

Given the investment horizon of 90 days Fastenal Company is expected to generate 0.78 times more return on investment than Advance Auto. However, Fastenal Company is 1.29 times less risky than Advance Auto. It trades about 0.01 of its potential returns per unit of risk. Advance Auto Parts is currently generating about 0.0 per unit of risk. If you would invest  5,144  in Fastenal Company on March 28, 2022 and sell it today you would earn a total of  46.00  from holding Fastenal Company or generate 0.89% return on investment over 90 days.
Time Period24 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Fastenal Company  vs.  Advance Auto Parts

 Performance (%) 
      Timeline 
Fastenal 
Fastenal Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fastenal is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0249
Payout Ratio
0.69
Last Split Factor
2:1
Forward Annual Dividend Rate
1.24
Dividend Date
2022-05-25
Ex Dividend Date
2022-04-26
Last Split Date
2019-05-23

Fastenal Price Channel

Advance Auto Parts 
Advance Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Advance Auto Parts are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Advance Auto is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the insiders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0328
Payout Ratio
0.41
Last Split Factor
3:2
Forward Annual Dividend Rate
6.0
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-16
Last Split Date
2005-09-26

Advance Price Channel

Fastenal and Advance Auto Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Fastenal and Advance Auto

The main advantage of trading using opposite Fastenal and Advance Auto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastenal position performs unexpectedly, Advance Auto 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 Advance Auto will offset losses from the drop in Advance Auto's long position.
The idea behind Fastenal Company and Advance Auto Parts 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

Other Complementary Tools

Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Price Transformation
Use Price Transformation models to analyze depth of different equity instruments across global markets
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Commodity Channel Index
Use Commodity Channel Index to analyze current equity momentum
Go