Correlation Between Smart Digital and Mesa Air

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

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

Diversification Opportunities for Smart Digital and Mesa Air

0.63

Correlation Coefficient

Smart Digital  Mesa Air

Poor diversification

The 3 months correlation between Smart and Mesa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Smart Digital Group 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 Smart Digital 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 Smart Digital Group 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 Smart Digital i.e., Smart Digital and Mesa Air go up and down completely randomly.

Pair Corralation between Smart Digital and Mesa Air

Considering the 90-day investment horizon Smart Digital Group is expected to generate 6.16 times more return on investment than Mesa Air. However, Smart Digital is 6.16 times more volatile than Mesa Air Group. It trades about 0.13 of its potential returns per unit of risk. Mesa Air Group is currently generating about 0.09 per unit of risk. If you would invest  606.00  in Smart Digital Group on May 8, 2025 and sell it today you would earn a total of  462.00  from holding Smart Digital Group or generate 76.24% return on investment over 90 days.

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

Smart Digital Group  vs.  Mesa Air Group

Smart Digital Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Digital Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Smart Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Mesa Air Group

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Mesa Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Smart Digital and Mesa Air

The main advantage of trading using opposite Smart Digital and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Digital 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 Smart Digital Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.