Correlation Between Mesa Air and Hawaiian Holdings

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

Diversification Opportunities for Mesa Air and Hawaiian Holdings

0.0

Correlation Coefficient

Mesa Air  Hawaiian Holdings

Pay attention - limited upside

The 3 months correlation between Mesa and Hawaiian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Hawaiian Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Holdings 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 Hawaiian Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Holdings has no effect on the direction of Mesa Air i.e., Mesa Air and Hawaiian Holdings go up and down completely randomly.

Pair Corralation between Mesa Air and Hawaiian Holdings

Given the investment horizon of 90 days Mesa Air Group is expected to under-perform the Hawaiian Holdings. In addition to that, Mesa Air is 1.13 times more volatile than Hawaiian Holdings. It trades about -0.05 of its total potential returns per unit of risk. Hawaiian Holdings is currently generating about 0.18 per unit of volatility. If you would invest  1,232  in Hawaiian Holdings on September 25, 2024 and sell it today you would earn a total of  568.00  from holding Hawaiian Holdings or generate 46.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	46.03%
Values	Daily Returns

Mesa Air Group  vs.  Hawaiian Holdings

Mesa Air Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 1 (%) 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.

Hawaiian Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hawaiian Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mesa Air and Hawaiian Holdings

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

The idea behind Mesa Air Group and Hawaiian Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.