Correlation Between Mesa Air and BEST
Can any of the company-specific risk be diversified away by investing in both Mesa Air and BEST 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 BEST 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 BEST Inc, you can compare the effects of market volatilities on Mesa Air and BEST 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 BEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and BEST.
Diversification Opportunities for Mesa Air and BEST
Poor diversification
The 3 months correlation between Mesa and BEST is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and BEST Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEST Inc 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 BEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEST Inc has no effect on the direction of Mesa Air i.e., Mesa Air and BEST go up and down completely randomly.
Pair Corralation between Mesa Air and BEST
Given the investment horizon of 90 days Mesa Air Group is expected to under-perform the BEST. In addition to that, Mesa Air is 11.4 times more volatile than BEST Inc. It trades about -0.01 of its total potential returns per unit of risk. BEST Inc is currently generating about -0.14 per unit of volatility. If you would invest 274.00 in BEST Inc on August 31, 2024 and sell it today you would lose (9.00) from holding BEST Inc or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. BEST Inc
Performance |
| Timeline |
| Mesa Air Group |
| BEST Inc |
Mesa Air and BEST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and BEST
The main advantage of trading using opposite Mesa Air and BEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, BEST 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 BEST will offset losses from the drop in BEST'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 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |