Correlation Between Saia and Fossil
Can any of the company-specific risk be diversified away by investing in both Saia and Fossil 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 Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and Fossil Group, you can compare the effects of market volatilities on Saia and Fossil 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 Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and Fossil.
Diversification Opportunities for Saia and Fossil
Very weak diversification
The 3 months correlation between Saia and Fossil is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group 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 Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Saia i.e., Saia and Fossil go up and down completely randomly.
Pair Corralation between Saia and Fossil
Given the investment horizon of 90 days Saia is expected to generate 1.56 times less return on investment than Fossil. But when comparing it to its historical volatility, Saia Inc is 1.57 times less risky than Fossil. It trades about 0.23 of its potential returns per unit of risk. Fossil Group is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Fossil Group on August 29, 2024 and sell it today you would earn a total of 31.00 from holding Fossil Group or generate 27.93% 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. Fossil Group
Performance |
| Timeline |
| Saia Inc |
| Fossil Group |
Saia and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and Fossil
The main advantage of trading using opposite Saia and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.The idea behind Saia Inc and Fossil Group 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.| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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