Correlation Between Mesa Air and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Mesa Air and KeyCorp 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 KeyCorp 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 KeyCorp, you can compare the effects of market volatilities on Mesa Air and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and KeyCorp.
Diversification Opportunities for Mesa Air and KeyCorp
Good diversification
The 3 months correlation between Mesa and KeyCorp is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Mesa Air i.e., Mesa Air and KeyCorp go up and down completely randomly.
Pair Corralation between Mesa Air and KeyCorp
Given the investment horizon of 90 days Mesa Air Group is expected to generate 5.85 times more return on investment than KeyCorp. However, Mesa Air is 5.85 times more volatile than KeyCorp. It trades about 0.02 of its potential returns per unit of risk. KeyCorp is currently generating about 0.09 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. KeyCorp
Performance |
| Timeline |
| Mesa Air Group |
| KeyCorp |
Mesa Air and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and KeyCorp
The main advantage of trading using opposite Mesa Air and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp'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 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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