Correlation Between Jacobs Solutions and Mesa Air

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

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

Diversification Opportunities for Jacobs Solutions and Mesa Air

-0.7

Correlation Coefficient

Jacobs Solutions  Mesa Air

Excellent diversification

The 3 months correlation between Jacobs and Mesa is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions i.e., Jacobs Solutions and Mesa Air go up and down completely randomly.

Pair Corralation between Jacobs Solutions and Mesa Air

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the Mesa Air. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 2.83 times less risky than Mesa Air. The stock trades about -0.07 of its potential returns per unit of risk. The Mesa Air Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Mesa Air Group on September 17, 2024 and sell it today you would earn a total of  22.00  from holding Mesa Air Group or generate 25.88% return on investment over 90 days.

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

Jacobs Solutions  vs.  Mesa Air Group

Jacobs Solutions

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jacobs Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking indicators, Jacobs Solutions revealed solid returns over the last few months and may actually be approaching a breakup point.

Mesa Air Group

Risk-Adjusted Performance

0 of 100

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 latest uncertain 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.

Pair Trading with Jacobs Solutions and Mesa Air

The main advantage of trading using opposite Jacobs Solutions and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacobs Solutions 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 Jacobs Solutions 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.