Correlation Between Mesa Air and Sphere Entertainment

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

Diversification Opportunities for Mesa Air and Sphere Entertainment

0.33

Correlation Coefficient

Mesa Air  Sphere Entertainment

Weak diversification

The 3 months correlation between Mesa and Sphere is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Mesa Air i.e., Mesa Air and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Mesa Air and Sphere Entertainment

Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.54 times more return on investment than Sphere Entertainment. However, Mesa Air is 1.54 times more volatile than Sphere Entertainment Co. It trades about -0.01 of its potential returns per unit of risk. Sphere Entertainment Co is currently generating about -0.02 per unit of risk. If you would invest  117.00  in Mesa Air Group on December 5, 2024 and sell it today you would lose (18.00) from holding Mesa Air Group or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Mesa Air Group  vs.  Sphere Entertainment Co

Mesa Air Group

Risk-Adjusted Performance

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

Sphere Entertainment

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere Entertainment Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mesa Air and Sphere Entertainment

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

The idea behind Mesa Air Group and Sphere Entertainment Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.