Correlation Between Mesa Air and Funko

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

Diversification Opportunities for Mesa Air and Funko

0.72

Correlation Coefficient

Mesa Air  Funko

Poor diversification

The 3 months correlation between Mesa and Funko is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc 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 Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Mesa Air i.e., Mesa Air and Funko go up and down completely randomly.

Pair Corralation between Mesa Air and Funko

Given the investment horizon of 90 days Mesa Air is expected to generate 3.52 times less return on investment than Funko. In addition to that, Mesa Air is 1.02 times more volatile than Funko Inc. It trades about 0.07 of its total potential returns per unit of risk. Funko Inc is currently generating about 0.27 per unit of volatility. If you would invest  573.00  in Funko Inc on February 5, 2024 and sell it today you would earn a total of  84.00  from holding Funko Inc or generate 14.66% return on investment over 90 days.

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

Mesa Air Group  vs.  Funko Inc

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

Funko Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Funko Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Mesa Air and Funko

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

The idea behind Mesa Air Group and Funko Inc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.