Correlation Between Saia and ServiceNow
Can any of the company-specific risk be diversified away by investing in both Saia and ServiceNow 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 ServiceNow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and ServiceNow, you can compare the effects of market volatilities on Saia and ServiceNow 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 ServiceNow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and ServiceNow.
Diversification Opportunities for Saia and ServiceNow
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Saia and ServiceNow is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Saia i.e., Saia and ServiceNow go up and down completely randomly.
Pair Corralation between Saia and ServiceNow
Given the investment horizon of 90 days Saia Inc is expected to generate 1.11 times more return on investment than ServiceNow. However, Saia is 1.11 times more volatile than ServiceNow. It trades about -0.1 of its potential returns per unit of risk. ServiceNow is currently generating about -0.15 per unit of risk. If you would invest 45,940 in Saia Inc on December 28, 2024 and sell it today you would lose (8,340) from holding Saia Inc or give up 18.15% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Saia Inc vs. ServiceNow
Performance |
Timeline |
Saia Inc |
ServiceNow |
Saia and ServiceNow Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Saia and ServiceNow
The main advantage of trading using opposite Saia and ServiceNow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, ServiceNow 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 ServiceNow will offset losses from the drop in ServiceNow's long position.Saia vs. Marten Transport | Saia vs. Heartland Express | Saia vs. Universal Logistics Holdings | Saia vs. Covenant Logistics Group, |
ServiceNow vs. Autodesk | ServiceNow vs. Intuit Inc | ServiceNow vs. Zoom Video Communications | ServiceNow vs. Snowflake |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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