Correlation Between Mesa Air and Avis Budget
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Avis Budget 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 Avis Budget 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 Avis Budget Group, you can compare the effects of market volatilities on Mesa Air and Avis Budget 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 Avis Budget. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Avis Budget.
Diversification Opportunities for Mesa Air and Avis Budget
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesa and Avis is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group 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 Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Mesa Air i.e., Mesa Air and Avis Budget go up and down completely randomly.
Pair Corralation between Mesa Air and Avis Budget
Given the investment horizon of 90 days Mesa Air is expected to generate 1.01 times less return on investment than Avis Budget. In addition to that, Mesa Air is 1.28 times more volatile than Avis Budget Group. It trades about 0.2 of its total potential returns per unit of risk. Avis Budget Group is currently generating about 0.26 per unit of volatility. If you would invest 9,206 in Avis Budget Group on September 2, 2024 and sell it today you would earn a total of 1,701 from holding Avis Budget Group or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Avis Budget Group
Performance |
| Timeline |
| Mesa Air Group |
| Avis Budget Group |
Mesa Air and Avis Budget Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Avis Budget
The main advantage of trading using opposite Mesa Air and Avis Budget positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Avis Budget 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 Avis Budget will offset losses from the drop in Avis Budget'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 |
| Avis Budget vs. Hertz Global Hldgs | Avis Budget vs. Ryder System | Avis Budget vs. HE Equipment Services | Avis Budget vs. United Rentals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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