Correlation Between Air Lease and Saia

Can any of the company-specific risk be diversified away by investing in both Air Lease 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 Air Lease and Saia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and Saia Inc, you can compare the effects of market volatilities on Air Lease 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 Air Lease with a short position of Saia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Saia.

Diversification Opportunities for Air Lease and Saia

0.85

Correlation Coefficient

Air Lease  Saia

Very poor diversification

The 3 months correlation between Air and Saia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Air Lease 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 Air Lease 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 Air Lease i.e., Air Lease and Saia go up and down completely randomly.

Pair Corralation between Air Lease and Saia

Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.43 times less return on investment than Saia. But when comparing it to its historical volatility, Air Lease is 1.97 times less risky than Saia. It trades about 0.08 of its potential returns per unit of risk. Saia Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  43,462  in Saia Inc on September 27, 2024 and sell it today you would earn a total of  4,141  from holding Saia Inc or generate 9.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Air Lease  vs.  Saia Inc

Air Lease

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Saia Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating forward indicators, Saia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Air Lease and Saia

The main advantage of trading using opposite Air Lease and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease 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.

The idea behind Air Lease and Saia Inc 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.