Correlation Between Mesa Air and FREEPORT

Can any of the company-specific risk be diversified away by investing in both Mesa Air and FREEPORT 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 FREEPORT 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 FREEPORT MCMORAN INC 525, you can compare the effects of market volatilities on Mesa Air and FREEPORT 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 FREEPORT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and FREEPORT.

Diversification Opportunities for Mesa Air and FREEPORT

0.2

Correlation Coefficient

Mesa Air  FREEPORT

Modest diversification

The 3 months correlation between Mesa and FREEPORT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and FREEPORT MCMORAN INC 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FREEPORT MCMORAN 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 FREEPORT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FREEPORT MCMORAN INC has no effect on the direction of Mesa Air i.e., Mesa Air and FREEPORT go up and down completely randomly.

Pair Corralation between Mesa Air and FREEPORT

Given the investment horizon of 90 days Mesa Air Group is expected to generate 10.21 times more return on investment than FREEPORT. However, Mesa Air is 10.21 times more volatile than FREEPORT MCMORAN INC 525. It trades about 0.02 of its potential returns per unit of risk. FREEPORT MCMORAN INC 525 is currently generating about 0.01 per unit of risk. If you would invest  135.00  in Mesa Air Group on September 19, 2024 and sell it today you would lose (26.00) from holding Mesa Air Group or give up 19.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Mesa Air Group  vs.  FREEPORT MCMORAN INC 525

Mesa Air Group

Risk-Adjusted Performance

0 of 100

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.

FREEPORT MCMORAN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FREEPORT MCMORAN INC 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, FREEPORT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mesa Air and FREEPORT

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

The idea behind Mesa Air Group and FREEPORT MCMORAN INC 525 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.