Correlation Between Saia and Royal Bank

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

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

Diversification Opportunities for Saia and Royal Bank

0.48

Correlation Coefficient

Saia  Royal Bank

Very weak diversification

The 3 months correlation between Saia and Royal is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Royal Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Bank 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 Royal Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Bank has no effect on the direction of Saia i.e., Saia and Royal Bank go up and down completely randomly.

Pair Corralation between Saia and Royal Bank

Given the investment horizon of 90 days Saia Inc is expected to generate 7.49 times more return on investment than Royal Bank. However, Saia is 7.49 times more volatile than Royal Bank of. It trades about 0.02 of its potential returns per unit of risk. Royal Bank of is currently generating about 0.16 per unit of risk. If you would invest  43,799  in Saia Inc on October 9, 2024 and sell it today you would earn a total of  2,026  from holding Saia Inc or generate 4.63% 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.  Royal Bank of

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.

Royal Bank

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Bank of are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Royal Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Saia and Royal Bank

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

The idea behind Saia Inc and Royal Bank of 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.