Correlation Between Merit Medical and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Merit Medical and Mesa Air 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 Merit Medical and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merit Medical Systems and Mesa Air Group, you can compare the effects of market volatilities on Merit Medical and Mesa Air 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 Merit Medical with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Medical and Mesa Air.
Diversification Opportunities for Merit Medical and Mesa Air
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Merit and Mesa is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Merit Medical Systems and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group and Merit Medical 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 Merit Medical Systems are associated (or correlated) with Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Merit Medical i.e., Merit Medical and Mesa Air go up and down completely randomly.
Pair Corralation between Merit Medical and Mesa Air
Given the investment horizon of 90 days Merit Medical Systems is expected to generate 0.21 times more return on investment than Mesa Air. However, Merit Medical Systems is 4.72 times less risky than Mesa Air. It trades about 0.15 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.01 per unit of risk. If you would invest 8,279 in Merit Medical Systems on September 2, 2024 and sell it today you would earn a total of 2,111 from holding Merit Medical Systems or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merit Medical Systems vs. Mesa Air Group
Performance |
| Timeline |
| Merit Medical Systems |
| Mesa Air Group |
Merit Medical and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Medical and Mesa Air
The main advantage of trading using opposite Merit Medical and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit Medical position performs unexpectedly, Mesa Air 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 Mesa Air will offset losses from the drop in Mesa Air's long position.| Merit Medical vs. Profound Medical Corp | Merit Medical vs. Si Bone | Merit Medical vs. Nevro Corp | Merit Medical vs. Orthopediatrics Corp |
| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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