Correlation Between Pershing Square and Copa Holdings

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

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

Diversification Opportunities for Pershing Square and Copa Holdings

-0.66

Correlation Coefficient

Pershing Square  Copa Holdings

Excellent diversification

The 3 months correlation between Pershing and Copa is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pershing Square Holdings 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 Pershing Square 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 Pershing Square Holdings 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 Pershing Square i.e., Pershing Square and Copa Holdings go up and down completely randomly.

Pair Corralation between Pershing Square and Copa Holdings

Assuming the 90 days horizon Pershing Square Holdings is expected to generate 1.0 times more return on investment than Copa Holdings. However, Pershing Square Holdings is 1.0 times less risky than Copa Holdings. It trades about 0.31 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.07 per unit of risk. If you would invest  4,684  in Pershing Square Holdings on October 20, 2024 and sell it today you would earn a total of  476.00  from holding Pershing Square Holdings or generate 10.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Pershing Square Holdings  vs.  Copa Holdings SA

Pershing Square Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pershing Square Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Pershing Square may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Pershing Square and Copa Holdings

The main advantage of trading using opposite Pershing Square and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pershing Square 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 Pershing Square Holdings 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.