Correlation Between Copa Holdings and 654106AH6

Can any of the company-specific risk be diversified away by investing in both Copa Holdings and 654106AH6 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 654106AH6 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 NIKE INC, you can compare the effects of market volatilities on Copa Holdings and 654106AH6 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 654106AH6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and 654106AH6.

Diversification Opportunities for Copa Holdings and 654106AH6

0.61

Correlation Coefficient

Copa Holdings  654106AH6

Poor diversification

The 3 months correlation between Copa and 654106AH6 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and NIKE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 654106AH6 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 654106AH6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 654106AH6 has no effect on the direction of Copa Holdings i.e., Copa Holdings and 654106AH6 go up and down completely randomly.

Pair Corralation between Copa Holdings and 654106AH6

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 11.5 times more return on investment than 654106AH6. However, Copa Holdings is 11.5 times more volatile than NIKE INC. It trades about 0.11 of its potential returns per unit of risk. NIKE INC is currently generating about -0.07 per unit of risk. If you would invest  8,601  in Copa Holdings SA on December 26, 2024 and sell it today you would earn a total of  1,020  from holding Copa Holdings SA or generate 11.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Copa Holdings SA  vs.  NIKE INC

Copa Holdings SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Copa Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

654106AH6

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIKE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 654106AH6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Copa Holdings and 654106AH6

The main advantage of trading using opposite Copa Holdings and 654106AH6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, 654106AH6 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 654106AH6 will offset losses from the drop in 654106AH6's long position.

The idea behind Copa Holdings SA and NIKE 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.