Correlation Between Mesa Air and Enersys

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

Diversification Opportunities for Mesa Air and Enersys

0.41

Correlation Coefficient

Mesa Air  Enersys

Very weak diversification

The 3 months correlation between Mesa and Enersys is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Enersys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enersys 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 Enersys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enersys has no effect on the direction of Mesa Air i.e., Mesa Air and Enersys go up and down completely randomly.

Pair Corralation between Mesa Air and Enersys

Given the investment horizon of 90 days Mesa Air Group is expected to generate 3.02 times more return on investment than Enersys. However, Mesa Air is 3.02 times more volatile than Enersys. It trades about 0.29 of its potential returns per unit of risk. Enersys is currently generating about -0.09 per unit of risk. 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mesa Air Group  vs.  Enersys

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.

Enersys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enersys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mesa Air and Enersys

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

The idea behind Mesa Air Group and Enersys 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.