Correlation Between Copa Holdings and MARRIOTT

Can any of the company-specific risk be diversified away by investing in both Copa Holdings and MARRIOTT 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 MARRIOTT 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 MARRIOTT INTERNATIONAL INC, you can compare the effects of market volatilities on Copa Holdings and MARRIOTT 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 MARRIOTT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and MARRIOTT.

Diversification Opportunities for Copa Holdings and MARRIOTT

0.22

Correlation Coefficient

Copa Holdings  MARRIOTT

Modest diversification

The 3 months correlation between Copa and MARRIOTT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and MARRIOTT INTERNATIONAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARRIOTT INTERNATIONAL 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 MARRIOTT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARRIOTT INTERNATIONAL has no effect on the direction of Copa Holdings i.e., Copa Holdings and MARRIOTT go up and down completely randomly.

Pair Corralation between Copa Holdings and MARRIOTT

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 3.78 times more return on investment than MARRIOTT. However, Copa Holdings is 3.78 times more volatile than MARRIOTT INTERNATIONAL INC. It trades about 0.0 of its potential returns per unit of risk. MARRIOTT INTERNATIONAL INC is currently generating about -0.33 per unit of risk. If you would invest  8,756  in Copa Holdings SA on October 14, 2024 and sell it today you would lose (24.00) from holding Copa Holdings SA or give up 0.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Copa Holdings SA  vs.  MARRIOTT INTERNATIONAL INC

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 latest abnormal performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MARRIOTT INTERNATIONAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Copa Holdings and MARRIOTT

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

The idea behind Copa Holdings SA and MARRIOTT INTERNATIONAL INC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.