Correlation Between Werner Enterprises and Meta Financial

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

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

Diversification Opportunities for Werner Enterprises and Meta Financial

0.28

Correlation Coefficient

Werner Enterprises  Meta Financial

Modest diversification

The 3 months correlation between Werner and Meta is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Werner Enterprises and Meta Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Financial Group 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 Meta Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Financial Group has no effect on the direction of Werner Enterprises i.e., Werner Enterprises and Meta Financial go up and down completely randomly.

Pair Corralation between Werner Enterprises and Meta Financial

Assuming the 90 days horizon Werner Enterprises is expected to under-perform the Meta Financial. In addition to that, Werner Enterprises is 1.22 times more volatile than Meta Financial Group. It trades about -0.19 of its total potential returns per unit of risk. Meta Financial Group is currently generating about -0.08 per unit of volatility. If you would invest  7,095  in Meta Financial Group on December 20, 2024 and sell it today you would lose (545.00) from holding Meta Financial Group or give up 7.68% of portfolio value over 90 days.

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

Werner Enterprises  vs.  Meta Financial Group

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 fragile 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.

Meta Financial Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meta Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Werner Enterprises and Meta Financial

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

The idea behind Werner Enterprises and Meta Financial Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.