Correlation Between BJs Restaurants and Mesa Air

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Can any of the company-specific risk be diversified away by investing in both BJs Restaurants 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 BJs Restaurants and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Restaurants and Mesa Air Group, you can compare the effects of market volatilities on BJs Restaurants 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 BJs Restaurants with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Mesa Air.

Diversification Opportunities for BJs Restaurants and Mesa Air

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BJs and Mesa is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants i.e., BJs Restaurants and Mesa Air go up and down completely randomly.

Pair Corralation between BJs Restaurants and Mesa Air

Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the Mesa Air. But the stock apears to be less risky and, when comparing its historical volatility, BJs Restaurants is 1.76 times less risky than Mesa Air. The stock trades about -0.05 of its potential returns per unit of risk. The Mesa Air Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Mesa Air Group on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Mesa Air Group or generate 20.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

BJs Restaurants  vs.  Mesa Air Group

 Performance 
       Timeline  
BJs Restaurants 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in BJs Restaurants are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, BJs Restaurants demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Mesa Air Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 conflicting 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.

BJs Restaurants and Mesa Air Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BJs Restaurants and Mesa Air

The main advantage of trading using opposite BJs Restaurants and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Restaurants 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 BJs Restaurants 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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