Correlation Between Werner Enterprises and Knight Transportation

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

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

Diversification Opportunities for Werner Enterprises and Knight Transportation

0.77

Correlation Coefficient

Werner Enterprises  Knight Transportation

Poor diversification

The 3 months correlation between Werner and Knight is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and Knight Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Transportation 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 Knight Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Transportation has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and Knight Transportation go up and down completely randomly.

Pair Corralation between Werner Enterprises and Knight Transportation

Given the investment horizon of 90 days Werner Enterprises is expected to generate 0.93 times more return on investment than Knight Transportation. However, Werner Enterprises is 1.08 times less risky than Knight Transportation. It trades about 0.06 of its potential returns per unit of risk. Knight Transportation is currently generating about 0.03 per unit of risk. If you would invest  2,505  in Werner Enterprises on May 6, 2025 and sell it today you would earn a total of  180.00  from holding Werner Enterprises or generate 7.19% return on investment over 90 days.

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

Werner Enterprises  vs.  Knight Transportation

Werner Enterprises

Risk-Adjusted Performance

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 unfluctuating basic indicators, Werner Enterprises may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Knight Transportation

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Transportation are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Knight Transportation is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Werner Enterprises and Knight Transportation

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

The idea behind Werner Enterprises and Knight Transportation 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.