Correlation Between Saia and XPO Logistics
Can any of the company-specific risk be diversified away by investing in both Saia and XPO Logistics 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 XPO Logistics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and XPO Logistics, you can compare the effects of market volatilities on Saia and XPO Logistics 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 XPO Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and XPO Logistics.
Diversification Opportunities for Saia and XPO Logistics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Saia and XPO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and XPO Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPO Logistics 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 XPO Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPO Logistics has no effect on the direction of Saia i.e., Saia and XPO Logistics go up and down completely randomly.
Pair Corralation between Saia and XPO Logistics
Given the investment horizon of 90 days Saia is expected to generate 1.19 times less return on investment than XPO Logistics. In addition to that, Saia is 1.22 times more volatile than XPO Logistics. It trades about 0.27 of its total potential returns per unit of risk. XPO Logistics is currently generating about 0.39 per unit of volatility. If you would invest 11,083 in XPO Logistics on August 23, 2024 and sell it today you would earn a total of 3,886 from holding XPO Logistics or generate 35.06% 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. XPO Logistics
Performance |
| Timeline |
| Saia Inc |
| XPO Logistics |
Saia and XPO Logistics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and XPO Logistics
The main advantage of trading using opposite Saia and XPO Logistics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, XPO Logistics 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 XPO Logistics will offset losses from the drop in XPO Logistics' long position.The idea behind Saia Inc and XPO Logistics 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.| XPO Logistics vs. Knight Transportation | XPO Logistics vs. Schneider National | XPO Logistics vs. Heartland Express | XPO Logistics vs. Saia Inc |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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