Correlation Between Mesa Air and Air France-KLM
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Air France-KLM 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 Air France-KLM 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 Air France KLM SA, you can compare the effects of market volatilities on Mesa Air and Air France-KLM 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 Air France-KLM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Air France-KLM.
Diversification Opportunities for Mesa Air and Air France-KLM
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mesa and Air is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Air France KLM SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air France KLM 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 Air France-KLM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air France KLM has no effect on the direction of Mesa Air i.e., Mesa Air and Air France-KLM go up and down completely randomly.
Pair Corralation between Mesa Air and Air France-KLM
Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.09 times more return on investment than Air France-KLM. However, Mesa Air is 1.09 times more volatile than Air France KLM SA. It trades about 0.25 of its potential returns per unit of risk. Air France KLM SA is currently generating about -0.19 per unit of risk. If you would invest 91.00 in Mesa Air Group on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Mesa Air Group or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Air France KLM SA
Performance |
| Timeline |
| Mesa Air Group |
| Air France KLM |
Mesa Air and Air France-KLM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Air France-KLM
The main advantage of trading using opposite Mesa Air and Air France-KLM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Air France-KLM 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 Air France-KLM will offset losses from the drop in Air France-KLM'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 |
| Air France-KLM vs. Cebu Air | Air France-KLM vs. easyJet plc | Air France-KLM vs. Norse Atlantic ASA | Air France-KLM vs. Air China Limited |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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