Correlation Between Mesa Air and Black Hills
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Black Hills 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 Black Hills 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 Black Hills, you can compare the effects of market volatilities on Mesa Air and Black Hills 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 Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Black Hills.
Diversification Opportunities for Mesa Air and Black Hills
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesa and Black is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills 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 Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Mesa Air i.e., Mesa Air and Black Hills go up and down completely randomly.
Pair Corralation between Mesa Air and Black Hills
Given the investment horizon of 90 days Mesa Air Group is expected to generate 5.15 times more return on investment than Black Hills. However, Mesa Air is 5.15 times more volatile than Black Hills. It trades about 0.04 of its potential returns per unit of risk. Black Hills is currently generating about 0.05 per unit of risk. If you would invest 95.00 in Mesa Air Group on September 14, 2024 and sell it today you would earn a total of 12.00 from holding Mesa Air Group or generate 12.63% 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. Black Hills
Performance |
| Timeline |
| Mesa Air Group |
| Black Hills |
Mesa Air and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Black Hills
The main advantage of trading using opposite Mesa Air and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| Mesa Air vs. Southwest Airlines | Mesa Air vs. United Airlines Holdings | Mesa Air vs. Frontier Group Holdings |
| Black Hills vs. NewJersey Resources | Black Hills vs. Northwest Natural Gas | Black Hills vs. Spire Inc | Black Hills vs. Chesapeake Utilities |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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