Correlation Between NISOURCE and Saia

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

By analyzing existing cross correlation between NISOURCE FIN P and Saia Inc, you can compare the effects of market volatilities on NISOURCE and Saia 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 NISOURCE with a short position of Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISOURCE and Saia.

Diversification Opportunities for NISOURCE and Saia

0.79

Correlation Coefficient

NISOURCE  Saia

Poor diversification

The 3 months correlation between NISOURCE and Saia is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NISOURCE FIN P and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and NISOURCE 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 NISOURCE FIN P are associated (or correlated) with Saia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saia Inc has no effect on the direction of NISOURCE i.e., NISOURCE and Saia go up and down completely randomly.

Pair Corralation between NISOURCE and Saia

Assuming the 90 days trading horizon NISOURCE FIN P is expected to under-perform the Saia. But the bond apears to be less risky and, when comparing its historical volatility, NISOURCE FIN P is 3.4 times less risky than Saia. The bond trades about -0.02 of its potential returns per unit of risk. The Saia Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  45,573  in Saia Inc on September 24, 2024 and sell it today you would earn a total of  1,767  from holding Saia Inc or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	31.25%
Values	Daily Returns

NISOURCE FIN P  vs.  Saia Inc

NISOURCE FIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISOURCE FIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NISOURCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Saia Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 2 (%) 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.

Pair Trading with NISOURCE and Saia

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

The idea behind NISOURCE FIN P and Saia Inc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.