Correlation Between Copa Holdings and Marten Transport

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

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

Diversification Opportunities for Copa Holdings and Marten Transport

-0.33

Correlation Coefficient

Copa Holdings  Marten Transport

Very good diversification

The 3 months correlation between Copa and Marten is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Marten Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marten Transport and Copa 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 Copa Holdings SA are associated (or correlated) with Marten Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marten Transport has no effect on the direction of Copa Holdings i.e., Copa Holdings and Marten Transport go up and down completely randomly.

Pair Corralation between Copa Holdings and Marten Transport

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 1.12 times more return on investment than Marten Transport. However, Copa Holdings is 1.12 times more volatile than Marten Transport. It trades about 0.01 of its potential returns per unit of risk. Marten Transport is currently generating about -0.01 per unit of risk. If you would invest  9,376  in Copa Holdings SA on September 2, 2024 and sell it today you would lose (39.00) from holding Copa Holdings SA or give up 0.42% of portfolio value over 90 days.

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

Copa Holdings SA  vs.  Marten Transport

Copa Holdings SA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Copa Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marten Transport

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marten Transport are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Marten Transport is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Copa Holdings and Marten Transport

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

The idea behind Copa Holdings SA and Marten Transport 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.