Correlation Between Schneider National and Werner Enterprises

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

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

Diversification Opportunities for Schneider National and Werner Enterprises

0.92

Correlation Coefficient

Schneider National  Werner Enterprises

Almost no diversification

The 3 months correlation between Schneider and Werner is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Schneider National and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises and Schneider National 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 Schneider National are associated (or correlated) with Werner Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werner Enterprises has no effect on the direction of Schneider National i.e., Schneider National and Werner Enterprises go up and down completely randomly.

Pair Corralation between Schneider National and Werner Enterprises

Given the investment horizon of 90 days Schneider National is expected to generate 0.97 times more return on investment than Werner Enterprises. However, Schneider National is 1.04 times less risky than Werner Enterprises. It trades about 0.09 of its potential returns per unit of risk. Werner Enterprises is currently generating about 0.01 per unit of risk. If you would invest  2,267  in Schneider National on August 26, 2024 and sell it today you would earn a total of  894.00  from holding Schneider National or generate 39.44% return on investment over 90 days.

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

Schneider National  vs.  Werner Enterprises

Schneider National

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider National are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Schneider National reported solid returns over the last few months and may actually be approaching a breakup point.

Werner Enterprises

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprises are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Werner Enterprises may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Schneider National and Werner Enterprises

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

The idea behind Schneider National and Werner Enterprises 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.