Correlation Between Mesa Laboratories and Sobr Safe

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

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

Diversification Opportunities for Mesa Laboratories and Sobr Safe

0.21

Correlation Coefficient

Mesa Laboratories  Sobr Safe

Modest diversification

The 3 months correlation between Mesa and Sobr is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Laboratories and Sobr Safe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sobr Safe and Mesa Laboratories 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 Laboratories are associated (or correlated) with Sobr Safe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sobr Safe has no effect on the direction of Mesa Laboratories i.e., Mesa Laboratories and Sobr Safe go up and down completely randomly.

Pair Corralation between Mesa Laboratories and Sobr Safe

Given the investment horizon of 90 days Mesa Laboratories is expected to generate 0.28 times more return on investment than Sobr Safe. However, Mesa Laboratories is 3.57 times less risky than Sobr Safe. It trades about 0.08 of its potential returns per unit of risk. Sobr Safe is currently generating about -0.3 per unit of risk. If you would invest  11,984  in Mesa Laboratories on September 23, 2024 and sell it today you would earn a total of  1,224  from holding Mesa Laboratories or generate 10.21% return on investment over 90 days.

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

Mesa Laboratories  vs.  Sobr Safe

Mesa Laboratories

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Laboratories are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Laboratories may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sobr Safe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sobr Safe has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Mesa Laboratories and Sobr Safe

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

The idea behind Mesa Laboratories and Sobr Safe 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.