Correlation Between Xponential Fitness and Mesa Air

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

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

Diversification Opportunities for Xponential Fitness and Mesa Air

0.16

Correlation Coefficient

Xponential Fitness  Mesa Air

Average diversification

The 3 months correlation between Xponential and Mesa is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness 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 Xponential Fitness i.e., Xponential Fitness and Mesa Air go up and down completely randomly.

Pair Corralation between Xponential Fitness and Mesa Air

Given the investment horizon of 90 days Xponential Fitness is expected to under-perform the Mesa Air. But the stock apears to be less risky and, when comparing its historical volatility, Xponential Fitness is 1.15 times less risky than Mesa Air. The stock trades about -0.05 of its potential returns per unit of risk. The Mesa Air Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  103.00  in Mesa Air Group on December 1, 2024 and sell it today you would earn a total of  11.00  from holding Mesa Air Group or generate 10.68% return on investment over 90 days.

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

Xponential Fitness  vs.  Mesa Air Group

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Mesa Air Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mesa Air Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mesa Air sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xponential Fitness and Mesa Air

The main advantage of trading using opposite Xponential Fitness and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness 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 Xponential Fitness 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 Anywhere module to track or share privately all of your investments from the convenience of any device.