Correlation Between Werner Enterprises and PTSI Old

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

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

Diversification Opportunities for Werner Enterprises and PTSI Old

0.07

Correlation Coefficient

Werner Enterprises  PTSI Old

Significant diversification

The 3 months correlation between Werner and PTSI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and PTSI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTSI Old 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 PTSI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTSI Old has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and PTSI Old go up and down completely randomly.

Pair Corralation between Werner Enterprises and PTSI Old

Given the investment horizon of 90 days Werner Enterprises is expected to under-perform the PTSI Old. But the stock apears to be less risky and, when comparing its historical volatility, Werner Enterprises is 2.0 times less risky than PTSI Old. The stock trades about -0.02 of its potential returns per unit of risk. The PTSI Old is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,740  in PTSI Old on October 10, 2024 and sell it today you would lose (560.00) from holding PTSI Old or give up 20.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.73%
Values	Daily Returns

Werner Enterprises  vs.  PTSI Old

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. In spite of very healthy basic indicators, Werner Enterprises is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

PTSI Old

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days PTSI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly weak basic indicators, PTSI Old demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Werner Enterprises and PTSI Old

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

The idea behind Werner Enterprises and PTSI Old 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.