Correlation Between Mesa Air and Grupo Aeroportuario
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Grupo Aeroportuario 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 Grupo Aeroportuario 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 Grupo Aeroportuario del, you can compare the effects of market volatilities on Mesa Air and Grupo Aeroportuario 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 Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Grupo Aeroportuario.
Diversification Opportunities for Mesa Air and Grupo Aeroportuario
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mesa and Grupo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of Mesa Air i.e., Mesa Air and Grupo Aeroportuario go up and down completely randomly.
Pair Corralation between Mesa Air and Grupo Aeroportuario
Given the investment horizon of 90 days Mesa Air Group is expected to generate 2.58 times more return on investment than Grupo Aeroportuario. However, Mesa Air is 2.58 times more volatile than Grupo Aeroportuario del. It trades about 0.2 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about -0.12 per unit of risk. If you would invest 94.00 in Mesa Air Group on August 30, 2024 and sell it today you would earn a total of 18.00 from holding Mesa Air Group or generate 19.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Grupo Aeroportuario del
Performance |
| Timeline |
| Mesa Air Group |
| Grupo Aeroportuario del |
Mesa Air and Grupo Aeroportuario Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Grupo Aeroportuario
The main advantage of trading using opposite Mesa Air and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Grupo Aeroportuario 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 Grupo Aeroportuario will offset losses from the drop in Grupo Aeroportuario's long position.The idea behind Mesa Air Group and Grupo Aeroportuario del pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Grupo Aeroportuario vs. Grupo Aeroportuario del | Grupo Aeroportuario vs. AerSale Corp | Grupo Aeroportuario vs. Flughafen Zrich AG | Grupo Aeroportuario vs. Grupo Aeroportuario del |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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