Correlation Between East Africa and Mesa Air
Can any of the company-specific risk be diversified away by investing in both East Africa 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 East Africa and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Mesa Air Group, you can compare the effects of market volatilities on East Africa 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 East Africa with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Mesa Air.
Diversification Opportunities for East Africa and Mesa Air
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between East and Mesa is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals 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 East Africa 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 East Africa Metals 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 East Africa i.e., East Africa and Mesa Air go up and down completely randomly.
Pair Corralation between East Africa and Mesa Air
Assuming the 90 days horizon East Africa Metals is expected to generate 10.39 times more return on investment than Mesa Air. However, East Africa is 10.39 times more volatile than Mesa Air Group. It trades about 0.09 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.02 per unit of risk. If you would invest 13.00 in East Africa Metals on August 30, 2024 and sell it today you would lose (2.00) from holding East Africa Metals or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Africa Metals vs. Mesa Air Group
Performance |
| Timeline |
| East Africa Metals |
| Mesa Air Group |
East Africa and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Mesa Air
The main advantage of trading using opposite East Africa and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa 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.| East Africa vs. Silver Hammer Mining | East Africa vs. Reyna Silver Corp | East Africa vs. Guanajuato Silver | East Africa vs. Silver One Resources |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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