Correlation Between Brunswick and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Copa Holdings SA, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Copa Holdings.
Diversification Opportunities for Brunswick and Copa Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brunswick and Copa is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick 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 Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Copa Holdings go up and down completely randomly.
Pair Corralation between Brunswick and Copa Holdings
Allowing for the 90-day total investment horizon Brunswick is expected to generate 1.26 times less return on investment than Copa Holdings. In addition to that, Brunswick is 1.09 times more volatile than Copa Holdings SA. It trades about 0.02 of its total potential returns per unit of risk. Copa Holdings SA is currently generating about 0.03 per unit of volatility. If you would invest 7,639 in Copa Holdings SA on September 2, 2024 and sell it today you would earn a total of 1,698 from holding Copa Holdings SA or generate 22.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Copa Holdings SA
Performance |
| Timeline |
| Brunswick |
| Copa Holdings SA |
Brunswick and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Copa Holdings
The main advantage of trading using opposite Brunswick and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| Copa Holdings vs. Canadian Pacific Railway | Copa Holdings vs. Werner Enterprises | Copa Holdings vs. Canadian National Railway | Copa Holdings vs. CSX Corporation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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