Correlation Between Amazon and Werner Enterprise

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Can any of the company-specific risk be diversified away by investing in both Amazon and Werner Enterprise 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 Amazon and Werner Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Werner Enterprise, you can compare the effects of market volatilities on Amazon and Werner Enterprise 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 Amazon with a short position of Werner Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Werner Enterprise.

Diversification Opportunities for Amazon and Werner Enterprise

  Correlation Coefficient

Very good diversification

The 3 months correlation between Amazon and Werner is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Werner Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprise and Amazon 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 Amazon Inc are associated (or correlated) with Werner Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werner Enterprise has no effect on the direction of Amazon i.e., Amazon and Werner Enterprise go up and down completely randomly.

Pair Corralation between Amazon and Werner Enterprise

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Werner Enterprise. In addition to that, Amazon is 1.45 times more volatile than Werner Enterprise. It trades about -0.03 of its total potential returns per unit of risk. Werner Enterprise is currently generating about 0.02 per unit of volatility. If you would invest  3,920  in Werner Enterprise on August 31, 2022 and sell it today you would earn a total of  356.00  from holding Werner Enterprise or generate 9.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

Amazon Inc  vs.  Werner Enterprise

 Performance (%) 
Amazon Inc 
Amazon Performance
0 of 100
Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Amazon Price Channel

Werner Enterprise 
Werner Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprise are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Werner Enterprise may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Werner Price Channel

Amazon and Werner Enterprise Volatility Contrast

   Predicted Return Density   

Pair Trading with Amazon and Werner Enterprise

The main advantage of trading using opposite Amazon and Werner Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Werner Enterprise 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 Enterprise will offset losses from the drop in Werner Enterprise's long position.
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The idea behind Amazon Inc and Werner Enterprise 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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