Correlation Between Saia and Cars

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

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

Diversification Opportunities for Saia and Cars

0.83

Correlation Coefficient

Saia  Cars

Very poor diversification

The 3 months correlation between Saia and Cars is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Saia 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 Saia Inc are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Saia i.e., Saia and Cars go up and down completely randomly.

Pair Corralation between Saia and Cars

Given the investment horizon of 90 days Saia Inc is expected to generate 1.27 times more return on investment than Cars. However, Saia is 1.27 times more volatile than Cars Inc. It trades about 0.07 of its potential returns per unit of risk. Cars Inc is currently generating about 0.03 per unit of risk. If you would invest  20,861  in Saia Inc on September 24, 2024 and sell it today you would earn a total of  25,233  from holding Saia Inc or generate 120.96% return on investment over 90 days.

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

Saia Inc  vs.  Cars Inc

Saia Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Saia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cars Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cars Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cars is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Saia and Cars

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

The idea behind Saia Inc and Cars 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.