Correlation Between Werner Enterprises and Expeditors International

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

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

Diversification Opportunities for Werner Enterprises and Expeditors International

0.86

Correlation Coefficient

Werner Enterprises  Expeditors International

Very poor diversification

The 3 months correlation between Werner and Expeditors is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and Expeditors International of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expeditors International and Werner Enterprises 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 Werner Enterprises are associated (or correlated) with Expeditors International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expeditors International has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and Expeditors International go up and down completely randomly.

Pair Corralation between Werner Enterprises and Expeditors International

Given the investment horizon of 90 days Werner Enterprises is expected to under-perform the Expeditors International. In addition to that, Werner Enterprises is 1.4 times more volatile than Expeditors International of. It trades about -0.13 of its total potential returns per unit of risk. Expeditors International of is currently generating about -0.08 per unit of volatility. If you would invest  11,735  in Expeditors International of on February 5, 2024 and sell it today you would lose (239.00) from holding Expeditors International of or give up 2.04% of portfolio value over 90 days.

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

Werner Enterprises  vs.  Expeditors International of

Werner Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Werner Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Expeditors International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expeditors International of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Werner Enterprises and Expeditors International

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

The idea behind Werner Enterprises and Expeditors International of 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.