Correlation Between Mesa Air and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Encore Capital 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 Encore Capital 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 Encore Capital Group, you can compare the effects of market volatilities on Mesa Air and Encore Capital 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 Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Encore Capital.
Diversification Opportunities for Mesa Air and Encore Capital
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mesa and Encore is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital 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 Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of Mesa Air i.e., Mesa Air and Encore Capital go up and down completely randomly.
Pair Corralation between Mesa Air and Encore Capital
Given the investment horizon of 90 days Mesa Air Group is expected to generate 2.9 times more return on investment than Encore Capital. However, Mesa Air is 2.9 times more volatile than Encore Capital Group. It trades about 0.02 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.02 per unit of risk. If you would invest 115.00 in Mesa Air Group on September 4, 2024 and sell it today you would lose (13.00) from holding Mesa Air Group or give up 11.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Encore Capital Group
Performance |
| Timeline |
| Mesa Air Group |
| Encore Capital Group |
Mesa Air and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Encore Capital
The main advantage of trading using opposite Mesa Air and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Encore Capital 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 Encore Capital will offset losses from the drop in Encore Capital'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 |
| Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stocks Directory Find actively traded stocks across global markets |