Correlation Between Mesa Air and SMART Technologies

Can any of the company-specific risk be diversified away by investing in both Mesa Air and SMART Technologies 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 SMART Technologies 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 SMART Technologies, you can compare the effects of market volatilities on Mesa Air and SMART Technologies 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 SMART Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and SMART Technologies.

Diversification Opportunities for Mesa Air and SMART Technologies

0.0

Correlation Coefficient

Mesa Air  SMART Technologies

Pay attention - limited upside

The 3 months correlation between Mesa and SMART is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and SMART Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMART Technologies 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 SMART Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMART Technologies has no effect on the direction of Mesa Air i.e., Mesa Air and SMART Technologies go up and down completely randomly.

Pair Corralation between Mesa Air and SMART Technologies

If you would invest  182.00  in Mesa Air Group on September 24, 2024 and sell it today you would lose (69.00) from holding Mesa Air Group or give up 37.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Mesa Air Group  vs.  SMART Technologies

Mesa Air Group

Risk-Adjusted Performance

1 of 100

Very 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 strong basic indicators, Mesa Air is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SMART Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SMART Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, SMART Technologies is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mesa Air and SMART Technologies

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

The idea behind Mesa Air Group and SMART Technologies 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.