Correlation Between Federal Home and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Federal Home 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 Federal Home and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Home 530 and Mesa Air Group, you can compare the effects of market volatilities on Federal Home 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 Federal Home with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Home and Mesa Air.
Diversification Opportunities for Federal Home and Mesa Air
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and Mesa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Federal Home 530 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 Federal Home 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 Federal Home 530 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 Federal Home i.e., Federal Home and Mesa Air go up and down completely randomly.
Pair Corralation between Federal Home and Mesa Air
Assuming the 90 days horizon Federal Home is expected to generate 2.55 times less return on investment than Mesa Air. But when comparing it to its historical volatility, Federal Home 530 is 7.92 times less risky than Mesa Air. It trades about 0.52 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Mesa Air Group on October 24, 2024 and sell it today you would earn a total of 17.00 from holding Mesa Air Group or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Home 530 vs. Mesa Air Group
Performance |
| Timeline |
| Federal Home 530 |
| Mesa Air Group |
Federal Home and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Home and Mesa Air
The main advantage of trading using opposite Federal Home and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Home 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.| Federal Home vs. Mesa Air Group | Federal Home vs. Corsair Gaming | Federal Home vs. CarsalesCom Ltd ADR | Federal Home vs. Global E Online |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |