Correlation Between Mesa Air and Network CN
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Network CN 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 Network CN 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 Network CN, you can compare the effects of market volatilities on Mesa Air and Network CN 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 Network CN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Network CN.
Diversification Opportunities for Mesa Air and Network CN
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mesa and Network is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Network CN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network CN 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 Network CN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network CN has no effect on the direction of Mesa Air i.e., Mesa Air and Network CN go up and down completely randomly.
Pair Corralation between Mesa Air and Network CN
Given the investment horizon of 90 days Mesa Air is expected to generate 72.98 times less return on investment than Network CN. But when comparing it to its historical volatility, Mesa Air Group is 52.33 times less risky than Network CN. It trades about 0.2 of its potential returns per unit of risk. Network CN is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 108.00 in Network CN on September 1, 2024 and sell it today you would lose (43.00) from holding Network CN or give up 39.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mesa Air Group vs. Network CN
Performance |
| Timeline |
| Mesa Air Group |
| Network CN |
Mesa Air and Network CN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Network CN
The main advantage of trading using opposite Mesa Air and Network CN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Network CN 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 Network CN will offset losses from the drop in Network CN's long position.| Mesa Air vs. Canadian Pacific Railway | Mesa Air vs. Volaris | Mesa Air vs. Werner Enterprises | Mesa Air vs. Canadian National Railway |
| Network CN vs. Mesa Air Group | Network CN vs. The9 Ltd ADR | Network CN vs. Boyd Gaming | Network CN vs. Norfolk Southern |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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