Correlation Between Werner Enterprises and Compagnie Plastic

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

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

Diversification Opportunities for Werner Enterprises and Compagnie Plastic

0.41

Correlation Coefficient

Werner Enterprises  Compagnie Plastic

Very weak diversification

The 3 months correlation between Werner and Compagnie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and Compagnie Plastic go up and down completely randomly.

Pair Corralation between Werner Enterprises and Compagnie Plastic

Assuming the 90 days horizon Werner Enterprises is expected to under-perform the Compagnie Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Werner Enterprises is 1.28 times less risky than Compagnie Plastic. The stock trades about -0.2 of its potential returns per unit of risk. The Compagnie Plastic Omnium is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  970.00  in Compagnie Plastic Omnium on December 22, 2024 and sell it today you would earn a total of  40.00  from holding Compagnie Plastic Omnium or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Werner Enterprises  vs.  Compagnie Plastic Omnium

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Compagnie Plastic Omnium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Compagnie Plastic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Werner Enterprises and Compagnie Plastic

The main advantage of trading using opposite Werner Enterprises and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Werner Enterprises position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.

The idea behind Werner Enterprises and Compagnie Plastic Omnium 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.