Correlation Between Scientific Games and Werner Enterprises

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

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

Diversification Opportunities for Scientific Games and Werner Enterprises

0.72

Correlation Coefficient

Scientific Games  Werner Enterprises

Poor diversification

The 3 months correlation between Scientific and Werner is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Scientific Games and Werner Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werner Enterprises and Scientific Games 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 Scientific Games 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 Scientific Games i.e., Scientific Games and Werner Enterprises go up and down completely randomly.

Pair Corralation between Scientific Games and Werner Enterprises

Assuming the 90 days horizon Scientific Games is expected to under-perform the Werner Enterprises. In addition to that, Scientific Games is 1.15 times more volatile than Werner Enterprises. It trades about -0.02 of its total potential returns per unit of risk. Werner Enterprises is currently generating about 0.01 per unit of volatility. If you would invest  3,326  in Werner Enterprises on October 15, 2024 and sell it today you would earn a total of  14.00  from holding Werner Enterprises or generate 0.42% return on investment over 90 days.

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

Scientific Games  vs.  Werner Enterprises

Scientific Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Games has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Scientific Games is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Scientific Games and Werner Enterprises

The main advantage of trading using opposite Scientific Games and Werner Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scientific Games 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 Scientific Games 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.