Correlation Between Saia and ArcBest
Can any of the company-specific risk be diversified away by investing in both Saia and ArcBest 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 ArcBest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and ArcBest, you can compare the effects of market volatilities on Saia and ArcBest 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 ArcBest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and ArcBest.
Diversification Opportunities for Saia and ArcBest
Very poor diversification
The 3 months correlation between Saia and ArcBest is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and ArcBest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest 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 ArcBest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest has no effect on the direction of Saia i.e., Saia and ArcBest go up and down completely randomly.
Pair Corralation between Saia and ArcBest
Assuming the 90 days horizon Saia Inc is expected to generate 1.01 times more return on investment than ArcBest. However, Saia is 1.01 times more volatile than ArcBest. It trades about 0.08 of its potential returns per unit of risk. ArcBest is currently generating about 0.04 per unit of risk. If you would invest 19,800 in Saia Inc on September 12, 2024 and sell it today you would earn a total of 29,000 from holding Saia Inc or generate 146.46% 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. ArcBest
Performance |
| Timeline |
| Saia Inc |
| ArcBest |
Saia and ArcBest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and ArcBest
The main advantage of trading using opposite Saia and ArcBest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, ArcBest 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 ArcBest will offset losses from the drop in ArcBest's long position.The idea behind Saia Inc and ArcBest 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.| ArcBest vs. SCHNEIDER NATLINC CLB | ArcBest vs. Fukuyama Transporting Co | ArcBest vs. Superior Plus Corp | ArcBest vs. SIVERS SEMICONDUCTORS AB |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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