Correlation Between Mesa Air and African Agriculture
Can any of the company-specific risk be diversified away by investing in both Mesa Air and African Agriculture 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 Mesa Air and African Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesa Air Group and African Agriculture Holdings, you can compare the effects of market volatilities on Mesa Air and African Agriculture 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 Mesa Air with a short position of African Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and African Agriculture.
Diversification Opportunities for Mesa Air and African Agriculture
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mesa and African is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and African Agriculture Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Agriculture and Mesa Air 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 Mesa Air Group are associated (or correlated) with African Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Agriculture has no effect on the direction of Mesa Air i.e., Mesa Air and African Agriculture go up and down completely randomly.
Pair Corralation between Mesa Air and African Agriculture
Given the investment horizon of 90 days Mesa Air Group is expected to generate 0.19 times more return on investment than African Agriculture. However, Mesa Air Group is 5.15 times less risky than African Agriculture. It trades about -0.03 of its potential returns per unit of risk. African Agriculture Holdings is currently generating about -0.28 per unit of risk. If you would invest 124.00 in Mesa Air Group on September 3, 2024 and sell it today you would lose (16.00) from holding Mesa Air Group or give up 12.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.25% |
| Values | Daily Returns |
Mesa Air Group vs. African Agriculture Holdings
Performance |
| Timeline |
| Mesa Air Group |
| African Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mesa Air and African Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and African Agriculture
The main advantage of trading using opposite Mesa Air and African Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, African Agriculture 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 African Agriculture will offset losses from the drop in African Agriculture's long position.| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
| African Agriculture vs. American Airlines Group | African Agriculture vs. Mesa Air Group | African Agriculture vs. Everspin Technologies | African Agriculture vs. Tower Semiconductor |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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