Correlation Between Alliant Energy and Saia
Can any of the company-specific risk be diversified away by investing in both Alliant Energy 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 Alliant Energy and Saia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliant Energy Corp and Saia Inc, you can compare the effects of market volatilities on Alliant Energy 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 Alliant Energy with a short position of Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Saia.
Diversification Opportunities for Alliant Energy and Saia
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliant and Saia is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Alliant Energy 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 Alliant Energy Corp 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 Alliant Energy i.e., Alliant Energy and Saia go up and down completely randomly.
Pair Corralation between Alliant Energy and Saia
Considering the 90-day investment horizon Alliant Energy is expected to generate 1.92 times less return on investment than Saia. But when comparing it to its historical volatility, Alliant Energy Corp is 2.75 times less risky than Saia. It trades about 0.09 of its potential returns per unit of risk. Saia Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 38,306 in Saia Inc on September 1, 2024 and sell it today you would earn a total of 18,602 from holding Saia Inc or generate 48.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliant Energy Corp vs. Saia Inc
Performance |
| Timeline |
| Alliant Energy Corp |
| Saia Inc |
Alliant Energy and Saia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliant Energy and Saia
The main advantage of trading using opposite Alliant Energy and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy 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.| Alliant Energy vs. MGE Energy | Alliant Energy vs. CMS Energy | Alliant Energy vs. OGE Energy | Alliant Energy vs. DTE Energy |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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