Correlation Between Saia and Old Dominion
Can any of the company-specific risk be diversified away by investing in both Saia and Old Dominion 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 Old Dominion into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saia Inc and Old Dominion Freight, you can compare the effects of market volatilities on Saia and Old Dominion 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 Old Dominion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saia and Old Dominion.
Diversification Opportunities for Saia and Old Dominion
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Saia and Old is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Saia Inc and Old Dominion Freight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Dominion Freight 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 Old Dominion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Dominion Freight has no effect on the direction of Saia i.e., Saia and Old Dominion go up and down completely randomly.
Pair Corralation between Saia and Old Dominion
Assuming the 90 days horizon Saia is expected to generate 1.12 times less return on investment than Old Dominion. In addition to that, Saia is 1.4 times more volatile than Old Dominion Freight. It trades about 0.05 of its total potential returns per unit of risk. Old Dominion Freight is currently generating about 0.08 per unit of volatility. If you would invest 15,727 in Old Dominion Freight on September 12, 2024 and sell it today you would earn a total of 3,623 from holding Old Dominion Freight or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Saia Inc vs. Old Dominion Freight
Performance |
| Timeline |
| Saia Inc |
| Old Dominion Freight |
Saia and Old Dominion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saia and Old Dominion
The main advantage of trading using opposite Saia and Old Dominion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saia position performs unexpectedly, Old Dominion 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 Old Dominion will offset losses from the drop in Old Dominion's long position.The idea behind Saia Inc and Old Dominion Freight 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.| Old Dominion vs. SCHNEIDER NATLINC CLB | Old Dominion vs. Fukuyama Transporting Co | Old Dominion vs. Superior Plus Corp | Old Dominion 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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