Correlation Between Arm Holdings and Saia

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

By analyzing existing cross correlation between Arm Holdings plc and Saia Inc, you can compare the effects of market volatilities on Arm Holdings and Saia 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 Arm Holdings with a short position of Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and Saia.

Diversification Opportunities for Arm Holdings and Saia

0.04

Correlation Coefficient

Arm Holdings  Saia

Significant diversification

The 3 months correlation between Arm and Saia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with Saia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saia Inc has no effect on the direction of Arm Holdings i.e., Arm Holdings and Saia go up and down completely randomly.

Pair Corralation between Arm Holdings and Saia

Considering the 90-day investment horizon Arm Holdings is expected to generate 4.52 times less return on investment than Saia. But when comparing it to its historical volatility, Arm Holdings plc is 1.3 times less risky than Saia. It trades about 0.05 of its potential returns per unit of risk. Saia Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  48,614  in Saia Inc on September 5, 2024 and sell it today you would earn a total of  6,183  from holding Saia Inc or generate 12.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Arm Holdings plc  vs.  Saia Inc

Arm Holdings plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Arm Holdings plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Arm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Saia Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Saia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arm Holdings and Saia

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

The idea behind Arm Holdings plc and Saia Inc 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.