Correlation Between Copa Holdings and MARTIN

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

Diversification Opportunities for Copa Holdings and MARTIN

0.43

Correlation Coefficient

Copa Holdings  MARTIN

Very weak diversification

The 3 months correlation between Copa and MARTIN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and MARTIN MARIETTA MATLS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARTIN MARIETTA MATLS 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 MARTIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARTIN MARIETTA MATLS has no effect on the direction of Copa Holdings i.e., Copa Holdings and MARTIN go up and down completely randomly.

Pair Corralation between Copa Holdings and MARTIN

Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the MARTIN. In addition to that, Copa Holdings is 7.64 times more volatile than MARTIN MARIETTA MATLS. It trades about -0.09 of its total potential returns per unit of risk. MARTIN MARIETTA MATLS is currently generating about -0.07 per unit of volatility. If you would invest  9,727  in MARTIN MARIETTA MATLS on September 26, 2024 and sell it today you would lose (67.00) from holding MARTIN MARIETTA MATLS or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.85%
Values	Daily Returns

Copa Holdings SA  vs.  MARTIN MARIETTA MATLS

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.

MARTIN MARIETTA MATLS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARTIN MARIETTA MATLS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MARTIN 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 MARTIN

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

The idea behind Copa Holdings SA and MARTIN MARIETTA MATLS 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.