Correlation Between Universal Logistics and Werner Enterprises
Can any of the company-specific risk be diversified away by investing in both Universal Logistics 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 Universal Logistics and Werner Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Logistics Holdings and Werner Enterprises, you can compare the effects of market volatilities on Universal Logistics 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 Universal Logistics with a short position of Werner Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Logistics and Werner Enterprises.
Diversification Opportunities for Universal Logistics and Werner Enterprises
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Universal and Werner is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Universal Logistics Holdings and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises and Universal Logistics 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 Universal Logistics Holdings 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 Universal Logistics i.e., Universal Logistics and Werner Enterprises go up and down completely randomly.
Pair Corralation between Universal Logistics and Werner Enterprises
Considering the 90-day investment horizon Universal Logistics Holdings is expected to generate 2.24 times more return on investment than Werner Enterprises. However, Universal Logistics is 2.24 times more volatile than Werner Enterprises. It trades about 0.1 of its potential returns per unit of risk. Werner Enterprises is currently generating about 0.01 per unit of risk. If you would invest 2,444 in Universal Logistics Holdings on August 26, 2024 and sell it today you would earn a total of 2,597 from holding Universal Logistics Holdings or generate 106.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Logistics Holdings vs. Werner Enterprises
Performance |
| Timeline |
| Universal Logistics |
| Werner Enterprises |
Universal Logistics and Werner Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Logistics and Werner Enterprises
The main advantage of trading using opposite Universal Logistics and Werner Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Logistics 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.| Universal Logistics vs. Covenant Logistics Group, | Universal Logistics vs. Marten Transport | Universal Logistics vs. Midland States Bancorp | Universal Logistics vs. PC Connection |
| Werner Enterprises vs. Old Dominion Freight | Werner Enterprises vs. ArcBest Corp | Werner Enterprises vs. Knight Transportation | Werner Enterprises vs. Universal Logistics Holdings |
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 the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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