Correlation Between Mesa Air and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Mesa Air and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Mesa Air and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and HE Equipment.
Diversification Opportunities for Mesa Air and HE Equipment
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mesa and HEES is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Mesa Air i.e., Mesa Air and HE Equipment go up and down completely randomly.
Pair Corralation between Mesa Air and HE Equipment
Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.31 times more return on investment than HE Equipment. However, Mesa Air is 1.31 times more volatile than HE Equipment Services. It trades about 0.2 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.21 per unit of risk. If you would invest 92.00 in Mesa Air Group on September 1, 2024 and sell it today you would earn a total of 16.00 from holding Mesa Air Group or generate 17.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. HE Equipment Services
Performance |
| Timeline |
| Mesa Air Group |
| HE Equipment Services |
Mesa Air and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and HE Equipment
The main advantage of trading using opposite Mesa Air and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Mesa Air vs. Canadian Pacific Railway | Mesa Air vs. Werner Enterprises | Mesa Air vs. Canadian National Railway | Mesa Air vs. CSX Corporation |
| HE Equipment vs. McGrath RentCorp | HE Equipment vs. Herc Holdings | HE Equipment vs. PROG Holdings | HE Equipment vs. Custom Truck One |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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