Correlation Between Saia and NL Industries

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

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

Diversification Opportunities for Saia and NL Industries

0.57

Correlation Coefficient

Saia  NL Industries

Very weak diversification

The 3 months correlation between Saia and NL Industries is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Saia i.e., Saia and NL Industries go up and down completely randomly.

Pair Corralation between Saia and NL Industries

Given the investment horizon of 90 days Saia Inc is expected to under-perform the NL Industries. But the stock apears to be less risky and, when comparing its historical volatility, Saia Inc is 1.5 times less risky than NL Industries. The stock trades about -0.4 of its potential returns per unit of risk. The NL Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  774.00  in NL Industries on September 27, 2024 and sell it today you would earn a total of  30.00  from holding NL Industries or generate 3.88% return on investment over 90 days.

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

Saia Inc  vs.  NL Industries

Saia Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 4 (%) 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.

NL Industries

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, NL Industries may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Saia and NL Industries

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

The idea behind Saia Inc and NL Industries 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 Anywhere module to track or share privately all of your investments from the convenience of any device.