Correlation Between Bakkt Holdings and Copa Holdings

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

By analyzing existing cross correlation between Bakkt Holdings Warrant and Copa Holdings SA, you can compare the effects of market volatilities on Bakkt Holdings and Copa Holdings 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 Bakkt Holdings with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakkt Holdings and Copa Holdings.

Diversification Opportunities for Bakkt Holdings and Copa Holdings

-0.26

Correlation Coefficient

Bakkt Holdings  Copa Holdings

Very good diversification

The 3 months correlation between Bakkt and Copa is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Holdings Warrant and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and Bakkt Holdings 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 Bakkt Holdings Warrant are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Bakkt Holdings i.e., Bakkt Holdings and Copa Holdings go up and down completely randomly.

Pair Corralation between Bakkt Holdings and Copa Holdings

Assuming the 90 days trading horizon Bakkt Holdings Warrant is expected to generate 16.42 times more return on investment than Copa Holdings. However, Bakkt Holdings is 16.42 times more volatile than Copa Holdings SA. It trades about 0.15 of its potential returns per unit of risk. Copa Holdings SA is currently generating about -0.01 per unit of risk. If you would invest  8.18  in Bakkt Holdings Warrant on September 18, 2024 and sell it today you would earn a total of  38.82  from holding Bakkt Holdings Warrant or generate 474.57% return on investment over 90 days.

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

Bakkt Holdings Warrant  vs.  Copa Holdings SA

Bakkt Holdings Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bakkt Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Copa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bakkt Holdings and Copa Holdings

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

The idea behind Bakkt Holdings Warrant and Copa Holdings SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.