Correlation Between Canadian National and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Canadian National 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 Canadian National and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian National Railway and Mesa Air Group, you can compare the effects of market volatilities on Canadian National 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 Canadian National with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian National and Mesa Air.
Diversification Opportunities for Canadian National and Mesa Air
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Canadian and Mesa is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Canadian National Railway 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 Canadian National 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 Canadian National Railway 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 Canadian National i.e., Canadian National and Mesa Air go up and down completely randomly.
Pair Corralation between Canadian National and Mesa Air
Considering the 90-day investment horizon Canadian National Railway is expected to under-perform the Mesa Air. But the stock apears to be less risky and, when comparing its historical volatility, Canadian National Railway is 6.09 times less risky than Mesa Air. The stock trades about -0.01 of its potential returns per unit of risk. The Mesa Air Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 78.00 in Mesa Air Group on August 27, 2024 and sell it today you would earn a total of 9.00 from holding Mesa Air Group or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian National Railway vs. Mesa Air Group
Performance |
| Timeline |
| Canadian National Railway |
| Mesa Air Group |
Canadian National and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian National and Mesa Air
The main advantage of trading using opposite Canadian National and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian National 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.| Canadian National vs. Union Pacific | Canadian National vs. CSX Corporation | Canadian National vs. Norfolk Southern | Canadian National vs. Westinghouse Air Brake |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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