Correlation Between Knight Transportation and Saia

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

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

Diversification Opportunities for Knight Transportation and Saia

-0.23

Correlation Coefficient

Knight Transportation  Saia

Very good diversification

The 3 months correlation between Knight and Saia is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation and Saia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saia Inc and Knight Transportation 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 Knight Transportation 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 Knight Transportation i.e., Knight Transportation and Saia go up and down completely randomly.

Pair Corralation between Knight Transportation and Saia

Considering the 90-day investment horizon Knight Transportation is expected to generate 0.88 times more return on investment than Saia. However, Knight Transportation is 1.14 times less risky than Saia. It trades about -0.2 of its potential returns per unit of risk. Saia Inc is currently generating about -0.23 per unit of risk. If you would invest  5,273  in Knight Transportation on January 26, 2024 and sell it today you would lose (422.00) from holding Knight Transportation or give up 8.0% of portfolio value over 90 days.

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

Knight Transportation  vs.  Saia Inc

Knight Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knight Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Saia Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saia Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent forward indicators, Saia sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Knight Transportation and Saia

The main advantage of trading using opposite Knight Transportation and Saia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Transportation 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 Knight Transportation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.