Correlation Between Saia and Arcadium Lithium
Can any of the company-specific risk be diversified away by investing in both Saia and Arcadium Lithium 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 Arcadium Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and Arcadium Lithium plc, you can compare the effects of market volatilities on Saia and Arcadium Lithium 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 Arcadium Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and Arcadium Lithium.
Diversification Opportunities for Saia and Arcadium Lithium
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Saia and Arcadium is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Arcadium Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadium Lithium plc 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 Arcadium Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadium Lithium plc has no effect on the direction of Saia i.e., Saia and Arcadium Lithium go up and down completely randomly.
Pair Corralation between Saia and Arcadium Lithium
Given the investment horizon of 90 days Saia Inc is expected to under-perform the Arcadium Lithium. In addition to that, Saia is 1.84 times more volatile than Arcadium Lithium plc. It trades about -0.14 of its total potential returns per unit of risk. Arcadium Lithium plc is currently generating about -0.2 per unit of volatility. If you would invest 537.00 in Arcadium Lithium plc on September 12, 2024 and sell it today you would lose (25.00) from holding Arcadium Lithium plc or give up 4.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saia Inc vs. Arcadium Lithium plc
Performance |
| Timeline |
| Saia Inc |
| Arcadium Lithium plc |
Saia and Arcadium Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and Arcadium Lithium
The main advantage of trading using opposite Saia and Arcadium Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, Arcadium Lithium 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 Arcadium Lithium will offset losses from the drop in Arcadium Lithium's long position.| Saia vs. ArcBest Corp | Saia vs. Marten Transport | Saia vs. Werner Enterprises | Saia vs. Knight Transportation |
| Arcadium Lithium vs. Summit Hotel Properties | Arcadium Lithium vs. Rand Capital Corp | Arcadium Lithium vs. Equinix | Arcadium Lithium vs. Papaya Growth Opportunity |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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