Correlation Between Mesa Air and Oatly Group
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Oatly Group 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 Oatly Group 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 Oatly Group AB, you can compare the effects of market volatilities on Mesa Air and Oatly Group 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 Oatly Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Oatly Group.
Diversification Opportunities for Mesa Air and Oatly Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesa and Oatly is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Oatly Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oatly Group AB 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 Oatly Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oatly Group AB has no effect on the direction of Mesa Air i.e., Mesa Air and Oatly Group go up and down completely randomly.
Pair Corralation between Mesa Air and Oatly Group
Given the investment horizon of 90 days Mesa Air Group is expected to generate 0.68 times more return on investment than Oatly Group. However, Mesa Air Group is 1.46 times less risky than Oatly Group. It trades about 0.25 of its potential returns per unit of risk. Oatly Group AB is currently generating about -0.05 per unit of risk. If you would invest 91.00 in Mesa Air Group on August 31, 2024 and sell it today you would earn a total of 21.00 from holding Mesa Air Group or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Oatly Group AB
Performance |
| Timeline |
| Mesa Air Group |
| Oatly Group AB |
Mesa Air and Oatly Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Oatly Group
The main advantage of trading using opposite Mesa Air and Oatly Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Oatly Group 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 Oatly Group will offset losses from the drop in Oatly Group'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 |
| Oatly Group vs. Monster Beverage Corp | Oatly Group vs. Vita Coco | Oatly Group vs. PepsiCo | Oatly Group vs. The Coca Cola |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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