Correlation Between Saia and Waste Management
Can any of the company-specific risk be diversified away by investing in both Saia and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and Waste Management, you can compare the effects of market volatilities on Saia and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and Waste Management.
Diversification Opportunities for Saia and Waste Management
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Saia and Waste is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Saia i.e., Saia and Waste Management go up and down completely randomly.
Pair Corralation between Saia and Waste Management
Given the investment horizon of 90 days Saia Inc is expected to generate 2.69 times more return on investment than Waste Management. However, Saia is 2.69 times more volatile than Waste Management. It trades about 0.07 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest 23,752 in Saia Inc on September 1, 2024 and sell it today you would earn a total of 33,156 from holding Saia Inc or generate 139.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saia Inc vs. Waste Management
Performance |
| Timeline |
| Saia Inc |
| Waste Management |
Saia and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and Waste Management
The main advantage of trading using opposite Saia and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.The idea behind Saia Inc and Waste Management 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.| Waste Management vs. CRA International | Waste Management vs. ICF International | Waste Management vs. Forrester Research | Waste Management vs. Huron Consulting Group |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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