Correlation Between Turning Point and Mesa Air

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

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

Diversification Opportunities for Turning Point and Mesa Air

-0.1

Correlation Coefficient

Turning Point  Mesa Air

Good diversification

The 3 months correlation between Turning and Mesa is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Turning Point 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 Turning Point 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 Turning Point 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 Turning Point i.e., Turning Point and Mesa Air go up and down completely randomly.

Pair Corralation between Turning Point and Mesa Air

Considering the 90-day investment horizon Turning Point Brands is expected to generate 0.65 times more return on investment than Mesa Air. However, Turning Point Brands is 1.54 times less risky than Mesa Air. It trades about 0.0 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.16 per unit of risk. If you would invest  5,976  in Turning Point Brands on December 27, 2024 and sell it today you would lose (64.00) from holding Turning Point Brands or give up 1.07% of portfolio value over 90 days.

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

Turning Point Brands  vs.  Mesa Air Group

Turning Point Brands

Risk-Adjusted Performance

Very Weak

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

Mesa Air Group

Risk-Adjusted Performance

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 uncertain 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 Turning Point and Mesa Air

The main advantage of trading using opposite Turning Point and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turning Point 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 Turning Point 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..