Correlation Between SPARTAN STORES and Werner Enterprises

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

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

Diversification Opportunities for SPARTAN STORES and Werner Enterprises

-0.56

Correlation Coefficient

SPARTAN STORES  Werner Enterprises

Excellent diversification

The 3 months correlation between SPARTAN and Werner is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises and SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES i.e., SPARTAN STORES and Werner Enterprises go up and down completely randomly.

Pair Corralation between SPARTAN STORES and Werner Enterprises

Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 1.36 times more return on investment than Werner Enterprises. However, SPARTAN STORES is 1.36 times more volatile than Werner Enterprises. It trades about 0.01 of its potential returns per unit of risk. Werner Enterprises is currently generating about -0.24 per unit of risk. If you would invest  1,830  in SPARTAN STORES on December 21, 2024 and sell it today you would earn a total of  0.00  from holding SPARTAN STORES or generate 0.0% return on investment over 90 days.

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

SPARTAN STORES  vs.  Werner Enterprises

SPARTAN STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking indicators, SPARTAN STORES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 fragile 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 SPARTAN STORES and Werner Enterprises

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

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.