Correlation Between Compagnie Plastic and Werner Enterprises

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

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

Diversification Opportunities for Compagnie Plastic and Werner Enterprises

-0.36

Correlation Coefficient

Compagnie Plastic  Werner Enterprises

Very good diversification

The 3 months correlation between Compagnie and Werner is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Plastic Omnium and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises and Compagnie Plastic 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 Compagnie Plastic Omnium 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 Compagnie Plastic i.e., Compagnie Plastic and Werner Enterprises go up and down completely randomly.

Pair Corralation between Compagnie Plastic and Werner Enterprises

Assuming the 90 days horizon Compagnie Plastic Omnium is expected to generate 1.48 times more return on investment than Werner Enterprises. However, Compagnie Plastic is 1.48 times more volatile than Werner Enterprises. It trades about 0.14 of its potential returns per unit of risk. Werner Enterprises is currently generating about 0.04 per unit of risk. If you would invest  807.00  in Compagnie Plastic Omnium on October 24, 2024 and sell it today you would earn a total of  260.00  from holding Compagnie Plastic Omnium or generate 32.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.78%
Values	Daily Returns

Compagnie Plastic Omnium  vs.  Werner Enterprises

Compagnie Plastic Omnium

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.

Werner Enterprises

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Werner Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Werner Enterprises is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compagnie Plastic and Werner Enterprises

The main advantage of trading using opposite Compagnie Plastic and Werner Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Plastic 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 Compagnie Plastic Omnium 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.