Correlation Between Mesa Air and LeapFrog Enterprises

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

Diversification Opportunities for Mesa Air and LeapFrog Enterprises

0.0

Correlation Coefficient

Mesa Air  LeapFrog Enterprises

Pay attention - limited upside

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

Pair Corralation between Mesa Air and LeapFrog Enterprises

If you would invest  85.00  in Mesa Air Group on September 17, 2024 and sell it today you would earn a total of  33.00  from holding Mesa Air Group or generate 38.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mesa Air Group  vs.  LeapFrog Enterprises

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 somewhat strong basic indicators, Mesa Air is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

LeapFrog Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LeapFrog Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, LeapFrog Enterprises is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mesa Air and LeapFrog Enterprises

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

The idea behind Mesa Air Group and LeapFrog Enterprises 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.