Correlation Between Saia and ON Semiconductor

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

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

Diversification Opportunities for Saia and ON Semiconductor

0.67

Correlation Coefficient

Saia  ON Semiconductor

Poor diversification

The 3 months correlation between Saia and ON Semiconductor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Saia i.e., Saia and ON Semiconductor go up and down completely randomly.

Pair Corralation between Saia and ON Semiconductor

Given the investment horizon of 90 days Saia Inc is expected to generate 0.95 times more return on investment than ON Semiconductor. However, Saia Inc is 1.05 times less risky than ON Semiconductor. It trades about -0.1 of its potential returns per unit of risk. ON Semiconductor is currently generating about -0.19 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	Significant
Accuracy	100.0%
Values	Daily Returns

Saia Inc  vs.  ON Semiconductor

Saia Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Saia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ON Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Saia and ON Semiconductor

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

The idea behind Saia Inc and ON Semiconductor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.