Correlation Between Mesa Air and LanzaTech Global

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

Diversification Opportunities for Mesa Air and LanzaTech Global

0.15

Correlation Coefficient

Mesa Air  LanzaTech Global

Average diversification

The 3 months correlation between Mesa and LanzaTech is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global 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 LanzaTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LanzaTech Global has no effect on the direction of Mesa Air i.e., Mesa Air and LanzaTech Global go up and down completely randomly.

Pair Corralation between Mesa Air and LanzaTech Global

Given the investment horizon of 90 days Mesa Air is expected to generate 1.05 times less return on investment than LanzaTech Global. But when comparing it to its historical volatility, Mesa Air Group is 2.52 times less risky than LanzaTech Global. It trades about 0.38 of its potential returns per unit of risk. LanzaTech Global is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  8.00  in LanzaTech Global on September 18, 2024 and sell it today you would earn a total of  2.00  from holding LanzaTech Global or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Mesa Air Group  vs.  LanzaTech Global

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.

LanzaTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LanzaTech Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mesa Air and LanzaTech Global

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

The idea behind Mesa Air Group and LanzaTech Global 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.