Correlation Between Werner Enterprises and CSX

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

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

Diversification Opportunities for Werner Enterprises and CSX

0.86

Correlation Coefficient

Werner Enterprises  CSX

Very poor diversification

The 3 months correlation between Werner and CSX is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and CSX go up and down completely randomly.

Pair Corralation between Werner Enterprises and CSX

Given the investment horizon of 90 days Werner Enterprises is expected to under-perform the CSX. In addition to that, Werner Enterprises is 1.3 times more volatile than CSX Corporation. It trades about -0.17 of its total potential returns per unit of risk. CSX Corporation is currently generating about -0.09 per unit of volatility. If you would invest  3,233  in CSX Corporation on December 27, 2024 and sell it today you would lose (243.00) from holding CSX Corporation or give up 7.52% of portfolio value over 90 days.

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

Werner Enterprises  vs.  CSX Corp.

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 unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CSX Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Werner Enterprises and CSX

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

The idea behind Werner Enterprises and CSX Corporation 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.