Correlation Between Mesa Air and JD Sports
Can any of the company-specific risk be diversified away by investing in both Mesa Air and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Mesa Air and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and JD Sports.
Diversification Opportunities for Mesa Air and JD Sports
Excellent diversification
The 3 months correlation between Mesa and JDDSF is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Mesa Air i.e., Mesa Air and JD Sports go up and down completely randomly.
Pair Corralation between Mesa Air and JD Sports
Given the investment horizon of 90 days Mesa Air Group is expected to generate 2.7 times more return on investment than JD Sports. However, Mesa Air is 2.7 times more volatile than JD Sports Fashion. It trades about 0.02 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.01 per unit of risk. If you would invest 134.00 in Mesa Air Group on August 29, 2024 and sell it today you would lose (22.00) from holding Mesa Air Group or give up 16.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. JD Sports Fashion
Performance |
| Timeline |
| Mesa Air Group |
| JD Sports Fashion |
Mesa Air and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and JD Sports
The main advantage of trading using opposite Mesa Air and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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