Correlation Between Air New and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Copa Holdings SA, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Copa Holdings.
Diversification Opportunities for Air New and Copa Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Copa is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand 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 Air New 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 Air New Zealand 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 Air New i.e., Air New and Copa Holdings go up and down completely randomly.
Pair Corralation between Air New and Copa Holdings
Assuming the 90 days horizon Air New Zealand is expected to generate 4.18 times more return on investment than Copa Holdings. However, Air New is 4.18 times more volatile than Copa Holdings SA. It trades about 0.03 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.03 per unit of risk. If you would invest 42.00 in Air New Zealand on September 3, 2024 and sell it today you would lose (14.00) from holding Air New Zealand or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.02% |
| Values | Daily Returns |
Air New Zealand vs. Copa Holdings SA
Performance |
| Timeline |
| Air New Zealand |
| Copa Holdings SA |
Air New and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Copa Holdings
The main advantage of trading using opposite Air New and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. AirAsia Group Berhad | Air New vs. ANA Holdings ADR | Air New vs. Air France KLM SA | Air New vs. Cebu Air |
| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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