Correlation Between Knight Transportation and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Knight Transportation 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 Knight Transportation and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Transportation and Mesa Air Group, you can compare the effects of market volatilities on Knight Transportation 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 Knight Transportation with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Transportation and Mesa Air.
Diversification Opportunities for Knight Transportation and Mesa Air
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Knight and Mesa is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation 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 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 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 Knight Transportation i.e., Knight Transportation and Mesa Air go up and down completely randomly.
Pair Corralation between Knight Transportation and Mesa Air
Considering the 90-day investment horizon Knight Transportation is expected to generate 0.84 times more return on investment than Mesa Air. However, Knight Transportation is 1.19 times less risky than Mesa Air. It trades about 0.13 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.12 per unit of risk. If you would invest 5,279 in Knight Transportation on August 23, 2024 and sell it today you would earn a total of 342.00 from holding Knight Transportation or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Transportation vs. Mesa Air Group
Performance |
| Timeline |
| Knight Transportation |
| Mesa Air Group |
Knight Transportation and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Transportation and Mesa Air
The main advantage of trading using opposite Knight Transportation and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Transportation 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.| Knight Transportation vs. Marten Transport | Knight Transportation vs. Heartland Express | Knight Transportation vs. Universal Logistics Holdings | Knight Transportation vs. Schneider National |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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