Correlation Between Mesa Air and Air Transport
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Air Transport 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 Transport 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 Transport Services, you can compare the effects of market volatilities on Mesa Air and Air Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Air Transport.
Diversification Opportunities for Mesa Air and Air Transport
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mesa and Air is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Mesa Air i.e., Mesa Air and Air Transport go up and down completely randomly.
Pair Corralation between Mesa Air and Air Transport
Given the investment horizon of 90 days Mesa Air is expected to generate 2.09 times less return on investment than Air Transport. In addition to that, Mesa Air is 15.08 times more volatile than Air Transport Services. It trades about 0.01 of its total potential returns per unit of risk. Air Transport Services is currently generating about 0.34 per unit of volatility. If you would invest 2,200 in Air Transport Services on November 4, 2024 and sell it today you would earn a total of 22.00 from holding Air Transport Services or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Air Transport Services
Performance |
| Timeline |
| Mesa Air Group |
| Air Transport Services |
Mesa Air and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Air Transport
The main advantage of trading using opposite Mesa Air and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Air Transport 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 Transport will offset losses from the drop in Air Transport'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 Transport vs. Copa Holdings SA | Air Transport vs. SkyWest | Air Transport vs. Sun Country Airlines | Air Transport vs. Frontier Group Holdings |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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