Correlation Between Werner Enterprises and PAM Transportation
Can any of the company-specific risk be diversified away by investing in both Werner Enterprises and PAM 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 PAM 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 PAM Transportation Services, you can compare the effects of market volatilities on Werner Enterprises and PAM 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 PAM Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Werner Enterprises and PAM Transportation.
Diversification Opportunities for Werner Enterprises and PAM Transportation
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Werner and PAM is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and PAM Transportation Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAM 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 PAM Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAM Transportation has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and PAM Transportation go up and down completely randomly.
Pair Corralation between Werner Enterprises and PAM Transportation
Given the investment horizon of 90 days Werner Enterprises is expected to generate 5.11 times less return on investment than PAM Transportation. But when comparing it to its historical volatility, Werner Enterprises is 2.95 times less risky than PAM Transportation. It trades about 0.09 of its potential returns per unit of risk. PAM Transportation Services is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,558 in PAM Transportation Services on August 23, 2024 and sell it today you would earn a total of 234.00 from holding PAM Transportation Services or generate 15.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.91% |
| Values | Daily Returns |
Werner Enterprises vs. PAM Transportation Services
Performance |
| Timeline |
| Werner Enterprises |
| PAM Transportation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Werner Enterprises and PAM Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Werner Enterprises and PAM Transportation
The main advantage of trading using opposite Werner Enterprises and PAM Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Werner Enterprises position performs unexpectedly, PAM 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 PAM Transportation will offset losses from the drop in PAM Transportation's long position.| Werner Enterprises vs. Heartland Express | Werner Enterprises vs. Universal Logistics Holdings | Werner Enterprises vs. Schneider National | Werner Enterprises vs. Marten Transport |
| PAM Transportation vs. Heartland Express | PAM Transportation vs. Werner Enterprises | PAM Transportation vs. Universal Logistics Holdings | PAM Transportation vs. Schneider National |
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 Stocks Directory module to find actively traded stocks across global markets.
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