Correlation Between Mesa Air and Sun Country
Can any of the company-specific risk be diversified away by investing in both Mesa Air and Sun Country 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 Sun Country 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 Sun Country Airlines, you can compare the effects of market volatilities on Mesa Air and Sun Country 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 Sun Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesa Air and Sun Country.
Diversification Opportunities for Mesa Air and Sun Country
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mesa and Sun is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mesa Air Group and Sun Country Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Country Airlines 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 Sun Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Country Airlines has no effect on the direction of Mesa Air i.e., Mesa Air and Sun Country go up and down completely randomly.
Pair Corralation between Mesa Air and Sun Country
Given the investment horizon of 90 days Mesa Air Group is expected to under-perform the Sun Country. In addition to that, Mesa Air is 1.18 times more volatile than Sun Country Airlines. It trades about -0.35 of its total potential returns per unit of risk. Sun Country Airlines is currently generating about 0.15 per unit of volatility. If you would invest 1,618 in Sun Country Airlines on November 18, 2024 and sell it today you would earn a total of 110.00 from holding Sun Country Airlines or generate 6.8% 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. Sun Country Airlines
Performance |
| Timeline |
| Mesa Air Group |
| Sun Country Airlines |
Mesa Air and Sun Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesa Air and Sun Country
The main advantage of trading using opposite Mesa Air and Sun Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesa Air position performs unexpectedly, Sun Country 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 Sun Country will offset losses from the drop in Sun Country's long position.| Mesa Air vs. Allegiant Travel | Mesa Air vs. Sun Country Airlines | Mesa Air vs. Frontier Group Holdings | Mesa Air vs. Azul SA |
| Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA | Sun Country vs. SkyWest |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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