Correlation Between Boeing and Saia
Can any of the company-specific risk be diversified away by investing in both Boeing 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 Boeing and Saia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boeing and Saia Inc, you can compare the effects of market volatilities on Boeing 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 Boeing with a short position of Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boeing and Saia.
Diversification Opportunities for Boeing and Saia
Pay attention - limited upside
The 3 months correlation between Boeing and Saia is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Boeing 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 The Boeing 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 Boeing i.e., Boeing and Saia go up and down completely randomly.
Pair Corralation between Boeing and Saia
Allowing for the 90-day total investment horizon Boeing is expected to generate 24.38 times less return on investment than Saia. But when comparing it to its historical volatility, The Boeing is 1.66 times less risky than Saia. It trades about 0.01 of its potential returns per unit of risk. Saia Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 43,726 in Saia Inc on August 30, 2024 and sell it today you would earn a total of 12,712 from holding Saia Inc or generate 29.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Boeing vs. Saia Inc
Performance |
| Timeline |
| Boeing |
| Saia Inc |
Boeing and Saia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boeing and Saia
The main advantage of trading using opposite Boeing and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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 The Boeing 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.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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