Correlation Between Mesa Air and United Parks
Can any of the company-specific risk be diversified away by investing in both Mesa Air and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on Mesa Air and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and United Parks.
Diversification Opportunities for Mesa Air and United Parks
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mesa and United is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Mesa Air i.e., Mesa Air and United Parks go up and down completely randomly.
Pair Corralation between Mesa Air and United Parks
Given the investment horizon of 90 days Mesa Air Group is expected to generate 2.96 times more return on investment than United Parks. However, Mesa Air is 2.96 times more volatile than United Parks Resorts. It trades about 0.02 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.02 per unit of risk. If you would invest 126.00 in Mesa Air Group on September 4, 2024 and sell it today you would lose (23.00) from holding Mesa Air Group or give up 18.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. United Parks Resorts
Performance |
| Timeline |
| Mesa Air Group |
| United Parks Resorts |
Mesa Air and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and United Parks
The main advantage of trading using opposite Mesa Air and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
| United Parks vs. Hyatt Hotels | United Parks vs. Smart Share Global | United Parks vs. Sweetgreen | United Parks vs. Wyndham Hotels Resorts |
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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