Correlation Between Mesa Air and BCB Bancorp

Can any of the company-specific risk be diversified away by investing in both Mesa Air and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Mesa Air and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and BCB Bancorp.

Diversification Opportunities for Mesa Air and BCB Bancorp

-0.45

Correlation Coefficient

Mesa Air  BCB Bancorp

Very good diversification

The 3 months correlation between Mesa and BCB is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Mesa Air i.e., Mesa Air and BCB Bancorp go up and down completely randomly.

Pair Corralation between Mesa Air and BCB Bancorp

Given the investment horizon of 90 days Mesa Air Group is expected to under-perform the BCB Bancorp. In addition to that, Mesa Air is 2.08 times more volatile than BCB Bancorp. It trades about -0.03 of its total potential returns per unit of risk. BCB Bancorp is currently generating about 0.11 per unit of volatility. If you would invest  1,172  in BCB Bancorp on September 4, 2024 and sell it today you would earn a total of  164.00  from holding BCB Bancorp or generate 13.99% return on investment over 90 days.

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

Mesa Air Group  vs.  BCB Bancorp

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.

BCB Bancorp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCB Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, BCB Bancorp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesa Air and BCB Bancorp

The main advantage of trading using opposite Mesa Air and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's long position.

The idea behind Mesa Air Group and BCB Bancorp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.