Correlation Between Mesa Air and Cumulus Media

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

Diversification Opportunities for Mesa Air and Cumulus Media

0.6

Correlation Coefficient

Mesa Air  Cumulus Media

Poor diversification

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

Pair Corralation between Mesa Air and Cumulus Media

Given the investment horizon of 90 days Mesa Air Group is expected to generate 1.37 times more return on investment than Cumulus Media. However, Mesa Air is 1.37 times more volatile than Cumulus Media Class. It trades about 0.03 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.15 per unit of risk. If you would invest  102.00  in Mesa Air Group on September 20, 2024 and sell it today you would earn a total of  10.00  from holding Mesa Air Group or generate 9.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Mesa Air Group  vs.  Cumulus Media Class

Mesa Air Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cumulus Media Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cumulus Media Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mesa Air and Cumulus Media

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

The idea behind Mesa Air Group and Cumulus Media Class 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.