Correlation Between Mesa Air and Blue Moon

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

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

Diversification Opportunities for Mesa Air and Blue Moon

-0.6

Correlation Coefficient

Mesa Air  Blue Moon

Excellent diversification

The 3 months correlation between Mesa and Blue is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Metals and Mesa Air 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 Mesa Air Group are associated (or correlated) with Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Mesa Air i.e., Mesa Air and Blue Moon go up and down completely randomly.

Pair Corralation between Mesa Air and Blue Moon

Given the investment horizon of 90 days Mesa Air is expected to generate 4.39 times less return on investment than Blue Moon. In addition to that, Mesa Air is 1.07 times more volatile than Blue Moon Metals. It trades about 0.02 of its total potential returns per unit of risk. Blue Moon Metals is currently generating about 0.11 per unit of volatility. If you would invest  20.00  in Blue Moon Metals on September 25, 2024 and sell it today you would earn a total of  5.00  from holding Blue Moon Metals or generate 25.0% return on investment over 90 days.

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

Mesa Air Group  vs.  Blue Moon Metals

Mesa Air Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Mesa Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blue Moon Metals

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mesa Air and Blue Moon

The main advantage of trading using opposite Mesa Air and Blue Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Blue Moon 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 Blue Moon will offset losses from the drop in Blue Moon's long position.

The idea behind Mesa Air Group and Blue Moon Metals 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.