Correlation Between Mesa Air and Evolution Mining

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

Diversification Opportunities for Mesa Air and Evolution Mining

-0.5

Correlation Coefficient

Mesa Air  Evolution Mining

Very good diversification

The 3 months correlation between Mesa and Evolution is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Evolution Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Mining 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 Evolution Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Mining has no effect on the direction of Mesa Air i.e., Mesa Air and Evolution Mining go up and down completely randomly.

Pair Corralation between Mesa Air and Evolution Mining

Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.8 times more return on investment than Evolution Mining. However, Mesa Air is 1.8 times more volatile than Evolution Mining. It trades about 0.19 of its potential returns per unit of risk. Evolution Mining is currently generating about -0.25 per unit of risk. If you would invest  98.00  in Mesa Air Group on September 25, 2024 and sell it today you would earn a total of  16.00  from holding Mesa Air Group or generate 16.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Mesa Air Group  vs.  Evolution Mining

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 abnormal basic indicators, Mesa Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Evolution Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Mesa Air and Evolution Mining

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

The idea behind Mesa Air Group and Evolution Mining 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.