Correlation Between Copa Holdings and NESNVX

Can any of the company-specific risk be diversified away by investing in both Copa Holdings and NESNVX 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 NESNVX 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 NESNVX 47 15 JAN 53, you can compare the effects of market volatilities on Copa Holdings and NESNVX 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 NESNVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and NESNVX.

Diversification Opportunities for Copa Holdings and NESNVX

0.33

Correlation Coefficient

Copa Holdings  NESNVX

Weak diversification

The 3 months correlation between Copa and NESNVX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and NESNVX 47 15 JAN 53 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESNVX 47 15 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 NESNVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESNVX 47 15 has no effect on the direction of Copa Holdings i.e., Copa Holdings and NESNVX go up and down completely randomly.

Pair Corralation between Copa Holdings and NESNVX

Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the NESNVX. But the stock apears to be less risky and, when comparing its historical volatility, Copa Holdings SA is 1.17 times less risky than NESNVX. The stock trades about -0.02 of its potential returns per unit of risk. The NESNVX 47 15 JAN 53 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,148  in NESNVX 47 15 JAN 53 on September 30, 2024 and sell it today you would earn a total of  1,031  from holding NESNVX 47 15 JAN 53 or generate 11.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	62.5%
Values	Daily Returns

Copa Holdings SA  vs.  NESNVX 47 15 JAN 53

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.

NESNVX 47 15

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NESNVX 47 15 JAN 53 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NESNVX sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Copa Holdings and NESNVX

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

The idea behind Copa Holdings SA and NESNVX 47 15 JAN 53 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.