Correlation Between Primo Brands and Mesa Air

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

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

Diversification Opportunities for Primo Brands and Mesa Air

0.16

Correlation Coefficient

Primo Brands  Mesa Air

Average diversification

The 3 months correlation between Primo and Mesa is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group and Primo Brands 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 Primo Brands are associated (or correlated) with Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Primo Brands i.e., Primo Brands and Mesa Air go up and down completely randomly.

Pair Corralation between Primo Brands and Mesa Air

Given the investment horizon of 90 days Primo Brands is expected to generate 0.26 times more return on investment than Mesa Air. However, Primo Brands is 3.9 times less risky than Mesa Air. It trades about 0.1 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.0 per unit of risk. If you would invest  1,500  in Primo Brands on October 5, 2024 and sell it today you would earn a total of  1,599  from holding Primo Brands or generate 106.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Primo Brands  vs.  Mesa Air Group

Primo Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Mesa Air Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Primo Brands and Mesa Air

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

The idea behind Primo Brands and Mesa Air Group 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.