Correlation Between Kite Realty and Copa Holdings

Can any of the company-specific risk be diversified away by investing in both Kite Realty and Copa Holdings 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 Kite Realty and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kite Realty Group and Copa Holdings SA, you can compare the effects of market volatilities on Kite Realty and Copa Holdings 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 Kite Realty with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kite Realty and Copa Holdings.

Diversification Opportunities for Kite Realty and Copa Holdings

-0.76

Correlation Coefficient

Kite Realty  Copa Holdings

Pay attention - limited upside

The 3 months correlation between Kite and Copa is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kite Realty Group and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and Kite Realty 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 Kite Realty Group are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Kite Realty i.e., Kite Realty and Copa Holdings go up and down completely randomly.

Pair Corralation between Kite Realty and Copa Holdings

Considering the 90-day investment horizon Kite Realty Group is expected to under-perform the Copa Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Kite Realty Group is 1.05 times less risky than Copa Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The Copa Holdings SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kite Realty Group  vs.  Copa Holdings SA

Kite Realty Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with Kite Realty and Copa Holdings

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

The idea behind Kite Realty Group and Copa Holdings SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.