Correlation Between Copa Holdings and SunOpta
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and SunOpta 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 SunOpta 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 SunOpta, you can compare the effects of market volatilities on Copa Holdings and SunOpta 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 SunOpta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and SunOpta.
Diversification Opportunities for Copa Holdings and SunOpta
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Copa and SunOpta is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and SunOpta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunOpta 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 SunOpta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunOpta has no effect on the direction of Copa Holdings i.e., Copa Holdings and SunOpta go up and down completely randomly.
Pair Corralation between Copa Holdings and SunOpta
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the SunOpta. But the stock apears to be less risky and, when comparing its historical volatility, Copa Holdings SA is 1.04 times less risky than SunOpta. The stock trades about -0.12 of its potential returns per unit of risk. The SunOpta is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 772.00 in SunOpta on September 24, 2024 and sell it today you would earn a total of 1.00 from holding SunOpta or generate 0.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Copa Holdings SA vs. SunOpta
Performance |
Timeline |
Copa Holdings SA |
SunOpta |
Copa Holdings and SunOpta Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Copa Holdings and SunOpta
The main advantage of trading using opposite Copa Holdings and SunOpta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, SunOpta 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 SunOpta will offset losses from the drop in SunOpta's long position.The idea behind Copa Holdings SA and SunOpta 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.SunOpta vs. Seneca Foods Corp | SunOpta vs. Central Garden Pet | SunOpta vs. Central Garden Pet | SunOpta vs. Natures Sunshine Products |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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