Correlation Between CONSTELLATION and Mesa Air

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

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

Diversification Opportunities for CONSTELLATION and Mesa Air

0.05

Correlation Coefficient

CONSTELLATION  Mesa Air

Significant diversification

The 3 months correlation between CONSTELLATION and Mesa is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CONSTELLATION BRANDS INC 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 CONSTELLATION 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 CONSTELLATION BRANDS INC 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 CONSTELLATION i.e., CONSTELLATION and Mesa Air go up and down completely randomly.

Pair Corralation between CONSTELLATION and Mesa Air

Assuming the 90 days trading horizon CONSTELLATION is expected to generate 8.9 times less return on investment than Mesa Air. But when comparing it to its historical volatility, CONSTELLATION BRANDS INC is 20.36 times less risky than Mesa Air. It trades about 0.01 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  288.00  in Mesa Air Group on October 21, 2024 and sell it today you would lose (155.00) from holding Mesa Air Group or give up 53.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

CONSTELLATION BRANDS INC  vs.  Mesa Air Group

CONSTELLATION BRANDS INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Mesa Air Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CONSTELLATION and Mesa Air

The main advantage of trading using opposite CONSTELLATION and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONSTELLATION 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 CONSTELLATION BRANDS INC 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.