Correlation Between Mesa Air and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Nextera Energy 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 Nextera Energy 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 Nextera Energy, you can compare the effects of market volatilities on Mesa Air and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Nextera Energy.
Diversification Opportunities for Mesa Air and Nextera Energy
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mesa and Nextera is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Mesa Air i.e., Mesa Air and Nextera Energy go up and down completely randomly.
Pair Corralation between Mesa Air and Nextera Energy
Given the investment horizon of 90 days Mesa Air Group is expected to generate 3.35 times more return on investment than Nextera Energy. However, Mesa Air is 3.35 times more volatile than Nextera Energy. It trades about 0.17 of its potential returns per unit of risk. Nextera Energy is currently generating about -0.08 per unit of risk. If you would invest 116.00 in Mesa Air Group on October 24, 2024 and sell it today you would earn a total of 17.00 from holding Mesa Air Group or generate 14.66% 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. Nextera Energy
Performance |
| Timeline |
| Mesa Air Group |
| Nextera Energy |
Mesa Air and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Nextera Energy
The main advantage of trading using opposite Mesa Air and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy'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 |
| Nextera Energy vs. Thor Industries | Nextera Energy vs. Mesa Air Group | Nextera Energy vs. Air Transport Services | Nextera Energy vs. Sonos Inc |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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