Correlation Between Mesa Air and BJs Restaurants

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

Diversification Opportunities for Mesa Air and BJs Restaurants

-0.54

Correlation Coefficient

Mesa Air  BJs Restaurants

Excellent diversification

The 3 months correlation between Mesa and BJs is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Mesa Air i.e., Mesa Air and BJs Restaurants go up and down completely randomly.

Pair Corralation between Mesa Air and BJs Restaurants

Given the investment horizon of 90 days Mesa Air Group is expected to generate 2.42 times more return on investment than BJs Restaurants. However, Mesa Air is 2.42 times more volatile than BJs Restaurants. It trades about 0.04 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.02 per unit of risk. If you would invest  102.00  in Mesa Air Group on September 20, 2024 and sell it today you would earn a total of  18.00  from holding Mesa Air Group or generate 17.65% 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.  BJs Restaurants

Mesa Air Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BJs Restaurants

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, BJs Restaurants demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesa Air and BJs Restaurants

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

The idea behind Mesa Air Group and BJs Restaurants 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.