Correlation Between Curtiss Wright and Mesa Air

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

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

Diversification Opportunities for Curtiss Wright and Mesa Air

-0.75

Correlation Coefficient

Curtiss Wright  Mesa Air

Pay attention - limited upside

The 3 months correlation between Curtiss and Mesa is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Curtiss Wright 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 Curtiss Wright 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 Curtiss Wright 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 Curtiss Wright i.e., Curtiss Wright and Mesa Air go up and down completely randomly.

Pair Corralation between Curtiss Wright and Mesa Air

Allowing for the 90-day total investment horizon Curtiss Wright is expected to generate 0.38 times more return on investment than Mesa Air. However, Curtiss Wright is 2.63 times less risky than Mesa Air. It trades about 0.2 of its potential returns per unit of risk. Mesa Air Group is currently generating about -0.04 per unit of risk. If you would invest  30,260  in Curtiss Wright on September 3, 2024 and sell it today you would earn a total of  7,103  from holding Curtiss Wright or generate 23.47% return on investment over 90 days.

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

Curtiss Wright  vs.  Mesa Air Group

Curtiss Wright

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Curtiss Wright are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Curtiss Wright showed solid returns over the last few months and may actually be approaching a breakup point.

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 Curtiss Wright and Mesa Air

The main advantage of trading using opposite Curtiss Wright and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Curtiss Wright 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 Curtiss Wright 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.