Correlation Between Mesa Air and Western Union
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Western Union 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 Western Union 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 Western Union Co, you can compare the effects of market volatilities on Mesa Air and Western Union 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 Western Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Western Union.
Diversification Opportunities for Mesa Air and Western Union
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesa and Western is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Western Union Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Union 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 Western Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Union has no effect on the direction of Mesa Air i.e., Mesa Air and Western Union go up and down completely randomly.
Pair Corralation between Mesa Air and Western Union
Given the investment horizon of 90 days Mesa Air Group is expected to generate 4.12 times more return on investment than Western Union. However, Mesa Air is 4.12 times more volatile than Western Union Co. It trades about 0.02 of its potential returns per unit of risk. Western Union Co is currently generating about -0.04 per unit of risk. If you would invest 110.00 in Mesa Air Group on September 12, 2024 and sell it today you would lose (5.00) from holding Mesa Air Group or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesa Air Group vs. Western Union Co
Performance |
| Timeline |
| Mesa Air Group |
| Western Union |
Mesa Air and Western Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Western Union
The main advantage of trading using opposite Mesa Air and Western Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Western Union 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 Western Union will offset losses from the drop in Western Union'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 |
| Western Union vs. American Express | Western Union vs. Capital One Financial | Western Union vs. Upstart Holdings | Western Union vs. Ally Financial |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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