Correlation Between CONSOLIDATED and Mesa Air

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

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

Diversification Opportunities for CONSOLIDATED and Mesa Air

0.48

Correlation Coefficient

CONSOLIDATED  Mesa Air

Very weak diversification

The 3 months correlation between CONSOLIDATED and Mesa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CONSOLIDATED EDISON PANY 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 CONSOLIDATED 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 CONSOLIDATED EDISON PANY 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 CONSOLIDATED i.e., CONSOLIDATED and Mesa Air go up and down completely randomly.

Pair Corralation between CONSOLIDATED and Mesa Air

Assuming the 90 days trading horizon CONSOLIDATED EDISON PANY is expected to under-perform the Mesa Air. But the bond apears to be less risky and, when comparing its historical volatility, CONSOLIDATED EDISON PANY is 6.0 times less risky than Mesa Air. The bond trades about -0.19 of its potential returns per unit of risk. The Mesa Air Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Mesa Air Group on September 17, 2024 and sell it today you would earn a total of  22.00  from holding Mesa Air Group or generate 25.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

CONSOLIDATED EDISON PANY  vs.  Mesa Air Group

CONSOLIDATED EDISON PANY

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with CONSOLIDATED and Mesa Air

The main advantage of trading using opposite CONSOLIDATED and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSOLIDATED 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 CONSOLIDATED EDISON PANY 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.