Correlation Between EBRO FOODS and Werner Enterprises

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

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

Diversification Opportunities for EBRO FOODS and Werner Enterprises

-0.23

Correlation Coefficient

EBRO FOODS  Werner Enterprises

Very good diversification

The 3 months correlation between EBRO and Werner is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding EBRO FOODS and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises and EBRO FOODS 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 EBRO FOODS 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 EBRO FOODS i.e., EBRO FOODS and Werner Enterprises go up and down completely randomly.

Pair Corralation between EBRO FOODS and Werner Enterprises

Assuming the 90 days trading horizon EBRO FOODS is expected to generate 0.51 times more return on investment than Werner Enterprises. However, EBRO FOODS is 1.96 times less risky than Werner Enterprises. It trades about 0.08 of its potential returns per unit of risk. Werner Enterprises is currently generating about -0.24 per unit of risk. If you would invest  1,572  in EBRO FOODS on December 21, 2024 and sell it today you would earn a total of  60.00  from holding EBRO FOODS or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EBRO FOODS  vs.  Werner Enterprises

EBRO FOODS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EBRO FOODS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EBRO FOODS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Werner Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Werner Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EBRO FOODS and Werner Enterprises

The main advantage of trading using opposite EBRO FOODS and Werner Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBRO FOODS 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.

The idea behind EBRO FOODS and Werner 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.