Correlation Between Mesa Air and CONSTELLATION

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

Diversification Opportunities for Mesa Air and CONSTELLATION

-0.32

Correlation Coefficient

Mesa Air  CONSTELLATION

Very good diversification

The 3 months correlation between Mesa and CONSTELLATION is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and CONSTELLATION BRANDS INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSTELLATION BRANDS INC 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 CONSTELLATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSTELLATION BRANDS INC has no effect on the direction of Mesa Air i.e., Mesa Air and CONSTELLATION go up and down completely randomly.

Pair Corralation between Mesa Air and CONSTELLATION

Given the investment horizon of 90 days Mesa Air Group is expected to generate 46.05 times more return on investment than CONSTELLATION. However, Mesa Air is 46.05 times more volatile than CONSTELLATION BRANDS INC. It trades about 0.22 of its potential returns per unit of risk. CONSTELLATION BRANDS INC is currently generating about -0.11 per unit of risk. If you would invest  100.00  in Mesa Air Group on October 5, 2024 and sell it today you would earn a total of  26.00  from holding Mesa Air Group or generate 26.0% 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.  CONSTELLATION BRANDS INC

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

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONSTELLATION BRANDS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CONSTELLATION 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 CONSTELLATION

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

The idea behind Mesa Air Group and CONSTELLATION BRANDS INC 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 Global Correlations module to find global opportunities by holding instruments from different markets.