Correlation Between Werner Enterprises and US Xpress

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

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

Diversification Opportunities for Werner Enterprises and US Xpress

0.69

Correlation Coefficient

Werner Enterprises  US Xpress

Poor diversification

The 3 months correlation between Werner and USX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and US Xpress Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Xpress Enterprises 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 US Xpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Xpress Enterprises has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and US Xpress go up and down completely randomly.

Pair Corralation between Werner Enterprises and US Xpress

If you would invest  3,708  in Werner Enterprises on August 31, 2024 and sell it today you would earn a total of  338.00  from holding Werner Enterprises or generate 9.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Werner Enterprises  vs.  US Xpress Enterprises

Werner Enterprises

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Werner Enterprises may actually be approaching a critical reversion point that can send shares even higher in December 2024.

US Xpress Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Xpress Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, US Xpress is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Werner Enterprises and US Xpress

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

The idea behind Werner Enterprises and US Xpress 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.