Correlation Between CSX and Mesa Air

Can any of the company-specific risk be diversified away by investing in both CSX 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 CSX and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSX Corporation and Mesa Air Group, you can compare the effects of market volatilities on CSX 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 CSX with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSX and Mesa Air.

Diversification Opportunities for CSX and Mesa Air

0.8

Correlation Coefficient

CSX  Mesa Air

Very poor diversification

The 3 months correlation between CSX and Mesa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CSX Corp. 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 CSX 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 CSX Corporation 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 CSX i.e., CSX and Mesa Air go up and down completely randomly.

Pair Corralation between CSX and Mesa Air

Considering the 90-day investment horizon CSX Corporation is expected to generate 0.35 times more return on investment than Mesa Air. However, CSX Corporation is 2.88 times less risky than Mesa Air. It trades about -0.11 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.15 per unit of risk. If you would invest  3,239  in CSX Corporation on December 26, 2024 and sell it today you would lose (286.00) from holding CSX Corporation or give up 8.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CSX Corp.  vs.  Mesa Air Group

CSX Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mesa Air Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesa Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CSX and Mesa Air

The main advantage of trading using opposite CSX and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSX 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.

The idea behind CSX Corporation and Mesa Air Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.