Correlation Between Mesa Laboratories and Winmark

Can any of the company-specific risk be diversified away by investing in both Mesa Laboratories and Winmark 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 Laboratories and Winmark into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mesa Laboratories and Winmark, you can compare the effects of market volatilities on Mesa Laboratories and Winmark 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 Laboratories with a short position of Winmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Laboratories and Winmark.

Diversification Opportunities for Mesa Laboratories and Winmark

0.48

Correlation Coefficient

Mesa Laboratories  Winmark

Very weak diversification

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

Pair Corralation between Mesa Laboratories and Winmark

Given the investment horizon of 90 days Mesa Laboratories is expected to generate 1.73 times more return on investment than Winmark. However, Mesa Laboratories is 1.73 times more volatile than Winmark. It trades about -0.05 of its potential returns per unit of risk. Winmark is currently generating about -0.18 per unit of risk. If you would invest  13,188  in Mesa Laboratories on December 28, 2024 and sell it today you would lose (1,438) from holding Mesa Laboratories or give up 10.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Mesa Laboratories  vs.  Winmark

Mesa Laboratories

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesa Laboratories 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.

Winmark

Risk-Adjusted Performance

Very Weak

Over the last 90 days Winmark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mesa Laboratories and Winmark

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

The idea behind Mesa Laboratories and Winmark 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.