Correlation Between Mesa Air and Virco Manufacturing

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

Diversification Opportunities for Mesa Air and Virco Manufacturing

-0.26

Correlation Coefficient

Mesa Air  Virco Manufacturing

Very good diversification

The 3 months correlation between Mesa and Virco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Virco Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virco Manufacturing 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 Virco Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virco Manufacturing has no effect on the direction of Mesa Air i.e., Mesa Air and Virco Manufacturing go up and down completely randomly.

Pair Corralation between Mesa Air and Virco Manufacturing

Given the investment horizon of 90 days Mesa Air Group is expected to under-perform the Virco Manufacturing. In addition to that, Mesa Air is 1.3 times more volatile than Virco Manufacturing. It trades about -0.04 of its total potential returns per unit of risk. Virco Manufacturing is currently generating about 0.07 per unit of volatility. If you would invest  1,469  in Virco Manufacturing on September 3, 2024 and sell it today you would earn a total of  173.00  from holding Virco Manufacturing or generate 11.78% 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.  Virco Manufacturing

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Virco Manufacturing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Virco Manufacturing are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Virco Manufacturing exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesa Air and Virco Manufacturing

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

The idea behind Mesa Air Group and Virco Manufacturing 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 Commodity Directory module to find actively traded commodities issued by global exchanges.