Correlation Between Mesa Air and CONSOLIDATED

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

Diversification Opportunities for Mesa Air and CONSOLIDATED

0.48

Correlation Coefficient

Mesa Air  CONSOLIDATED

Very weak diversification

The 3 months correlation between Mesa and CONSOLIDATED is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and CONSOLIDATED EDISON PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOLIDATED EDISON PANY 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 CONSOLIDATED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOLIDATED EDISON PANY has no effect on the direction of Mesa Air i.e., Mesa Air and CONSOLIDATED go up and down completely randomly.

Pair Corralation between Mesa Air and CONSOLIDATED

Given the investment horizon of 90 days Mesa Air Group is expected to generate 6.68 times more return on investment than CONSOLIDATED. However, Mesa Air is 6.68 times more volatile than CONSOLIDATED EDISON PANY. It trades about 0.37 of its potential returns per unit of risk. CONSOLIDATED EDISON PANY is currently generating about -0.19 per unit of risk. 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	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Mesa Air Group  vs.  CONSOLIDATED EDISON PANY

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.

CONSOLIDATED EDISON PANY

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mesa Air and CONSOLIDATED

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

The idea behind Mesa Air Group and CONSOLIDATED EDISON PANY 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.

Check out your portfolio center.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.