Correlation Between Saia and LQR House

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

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

Diversification Opportunities for Saia and LQR House

-0.15

Correlation Coefficient

Saia  LQR House

Good diversification

The 3 months correlation between Saia and LQR is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and LQR House Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LQR House Common 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 LQR House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LQR House Common has no effect on the direction of Saia i.e., Saia and LQR House go up and down completely randomly.

Pair Corralation between Saia and LQR House

Given the investment horizon of 90 days Saia is expected to generate 15.0 times less return on investment than LQR House. But when comparing it to its historical volatility, Saia Inc is 3.72 times less risky than LQR House. It trades about 0.04 of its potential returns per unit of risk. LQR House Common is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  80.00  in LQR House Common on October 26, 2024 and sell it today you would earn a total of  54.00  from holding LQR House Common or generate 67.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.27%
Values	Daily Returns

Saia Inc  vs.  LQR House Common

Saia Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 3 (%) 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 February 2025.

LQR House Common

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days LQR House Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively fragile basic indicators, LQR House reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Saia and LQR House

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

The idea behind Saia Inc and LQR House Common 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.