Correlation Between Mesa Air and Sonos
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Sonos 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 Sonos 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 Sonos Inc, you can compare the effects of market volatilities on Mesa Air and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Sonos.
Diversification Opportunities for Mesa Air and Sonos
Very good diversification
The 3 months correlation between Mesa and Sonos is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Mesa Air i.e., Mesa Air and Sonos go up and down completely randomly.
Pair Corralation between Mesa Air and Sonos
Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.84 times more return on investment than Sonos. However, Mesa Air is 1.84 times more volatile than Sonos Inc. It trades about 0.25 of its potential returns per unit of risk. Sonos Inc is currently generating about 0.18 per unit of risk. If you would invest 85.00 in Mesa Air Group on September 19, 2024 and sell it today you would earn a total of 24.00 from holding Mesa Air Group or generate 28.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Sonos Inc
Performance |
| Timeline |
| Mesa Air Group |
| Sonos Inc |
Mesa Air and Sonos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Sonos
The main advantage of trading using opposite Mesa Air and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
| Sonos vs. LG Display Co | Sonos vs. Sony Group Corp | Sonos vs. Universal Electronics | Sonos vs. Samsung Electronics Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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