Correlation Between Mesa Air and Tyson Foods

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

Diversification Opportunities for Mesa Air and Tyson Foods

-0.3

Correlation Coefficient

Mesa Air  Tyson Foods

Very good diversification

The 3 months correlation between Mesa and Tyson is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of Mesa Air i.e., Mesa Air and Tyson Foods go up and down completely randomly.

Pair Corralation between Mesa Air and Tyson Foods

Given the investment horizon of 90 days Mesa Air Group is expected to generate 3.55 times more return on investment than Tyson Foods. However, Mesa Air is 3.55 times more volatile than Tyson Foods. It trades about 0.03 of its potential returns per unit of risk. Tyson Foods is currently generating about 0.01 per unit of risk. If you would invest  113.00  in Mesa Air Group on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Mesa Air Group or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mesa Air Group  vs.  Tyson Foods

Mesa Air Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 2 (%) 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.

Tyson Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tyson Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tyson Foods is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mesa Air and Tyson Foods

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

The idea behind Mesa Air Group and Tyson Foods 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..