Correlation Between Visa and Saia
Can any of the company-specific risk be diversified away by investing in both Visa and Saia 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 Visa and Saia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Saia Inc, you can compare the effects of market volatilities on Visa and Saia 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 Visa with a short position of Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Saia.
Diversification Opportunities for Visa and Saia
Very poor diversification
The 3 months correlation between Visa and Saia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Visa 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 Visa Class A are associated (or correlated) with Saia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saia Inc has no effect on the direction of Visa i.e., Visa and Saia go up and down completely randomly.
Pair Corralation between Visa and Saia
Taking into account the 90-day investment horizon Visa is expected to generate 2.5 times less return on investment than Saia. But when comparing it to its historical volatility, Visa Class A is 3.09 times less risky than Saia. It trades about 0.33 of its potential returns per unit of risk. Saia Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 44,000 in Saia Inc on September 3, 2024 and sell it today you would earn a total of 9,500 from holding Saia Inc or generate 21.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Visa Class A vs. Saia Inc
Performance |
| Timeline |
| Visa Class A |
| Saia Inc |
Visa and Saia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Saia
The main advantage of trading using opposite Visa and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Saia 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 Saia will offset losses from the drop in Saia's long position.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
| Saia vs. SINGAPORE AIRLINES | Saia vs. Salesforce | Saia vs. GungHo Online Entertainment | Saia vs. Methode Electronics |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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