Correlation Between Cumulus Media and Mesa Air
Can any of the company-specific risk be diversified away by investing in both Cumulus Media 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 Cumulus Media and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumulus Media Class and Mesa Air Group, you can compare the effects of market volatilities on Cumulus Media 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 Cumulus Media with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumulus Media and Mesa Air.
Diversification Opportunities for Cumulus Media and Mesa Air
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cumulus and Mesa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cumulus Media Class 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 Cumulus Media 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 Cumulus Media Class 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 Cumulus Media i.e., Cumulus Media and Mesa Air go up and down completely randomly.
Pair Corralation between Cumulus Media and Mesa Air
Given the investment horizon of 90 days Cumulus Media Class is expected to under-perform the Mesa Air. But the stock apears to be less risky and, when comparing its historical volatility, Cumulus Media Class is 1.18 times less risky than Mesa Air. The stock trades about -0.15 of its potential returns per unit of risk. The Mesa Air Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 136.00 in Mesa Air Group on September 1, 2024 and sell it today you would lose (28.00) from holding Mesa Air Group or give up 20.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cumulus Media Class vs. Mesa Air Group
Performance |
| Timeline |
| Cumulus Media Class |
| Mesa Air Group |
Cumulus Media and Mesa Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cumulus Media and Mesa Air
The main advantage of trading using opposite Cumulus Media and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumulus Media 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.| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
| Mesa Air vs. Canadian Pacific Railway | Mesa Air vs. Werner Enterprises | Mesa Air vs. Canadian National Railway | Mesa Air vs. CSX Corporation |
Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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