Correlation Between A M and Werner Enterprise

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

Diversification Opportunities for A M and Werner Enterprise

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between A M and Werner is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding A M E and Werner Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprise and A M 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 A M E 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 A M i.e., A M and Werner Enterprise go up and down completely randomly.

Pair Corralation between A M and Werner Enterprise

Given the investment horizon of 90 days A M E is expected to generate 1.05 times more return on investment than Werner Enterprise. However, A M is 1.05 times more volatile than Werner Enterprise. It trades about 0.06 of its potential returns per unit of risk. Werner Enterprise is currently generating about 0.0 per unit of risk. If you would invest  35,681  in A M E on July 8, 2022 and sell it today you would earn a total of  19,641  from holding A M E or generate 55.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

A M E  vs.  Werner Enterprise

 Performance (%) 
       Timeline  
A M E 
A M Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in A M E are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, A M revealed solid returns over the last few months and may actually be approaching a breakup point.

A M Price Channel

Werner Enterprise 
Werner Performance
0 of 100
Over the last 90 days Werner Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Werner Enterprise is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Werner Price Channel

A M and Werner Enterprise Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with A M and Werner Enterprise

The main advantage of trading using opposite A M and Werner Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A M 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.
A M vs. Amazon Inc
The idea behind A M E 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.
Werner Enterprise vs. Amazon Inc
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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