Correlation Between Air Lease and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Air Lease and Mesa Air 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 Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Mesa Air Group, you can compare the effects of market volatilities on Air Lease and Mesa Air 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 Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Mesa Air.
Diversification Opportunities for Air Lease and Mesa Air
Excellent diversification
The 3 months correlation between Air and Mesa is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group 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 Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Air Lease i.e., Air Lease and Mesa Air go up and down completely randomly.
Pair Corralation between Air Lease and Mesa Air
Allowing for the 90-day total investment horizon Air Lease is expected to generate 2.15 times less return on investment than Mesa Air. But when comparing it to its historical volatility, Air Lease is 3.56 times less risky than Mesa Air. It trades about 0.07 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Mesa Air Group on August 26, 2024 and sell it today you would earn a total of 15.00 from holding Mesa Air Group or generate 20.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Mesa Air Group
Performance |
| Timeline |
| Air Lease |
| Mesa Air Group |
Air Lease and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Mesa Air
The main advantage of trading using opposite Air Lease and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Mesa Air 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 Mesa Air will offset losses from the drop in Mesa Air's long position.| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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