Correlation Between Copa Holdings and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Copa Holdings and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Dow Jones.
Diversification Opportunities for Copa Holdings and Dow Jones
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Dow is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Copa Holdings i.e., Copa Holdings and Dow Jones go up and down completely randomly.
Pair Corralation between Copa Holdings and Dow Jones
Assuming the 90 days horizon Copa Holdings is expected to generate 1.13 times less return on investment than Dow Jones. In addition to that, Copa Holdings is 3.19 times more volatile than Dow Jones Industrial. It trades about 0.04 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 4,233,015 in Dow Jones Industrial on August 30, 2024 and sell it today you would earn a total of 239,191 from holding Dow Jones Industrial or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Dow Jones Industrial
Performance |
| Timeline |
Copa Holdings and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Copa Holdings SA
Pair trading matchups for Copa Holdings
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Copa Holdings and Dow Jones
The main advantage of trading using opposite Copa Holdings and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Copa Holdings vs. Broadcom | Copa Holdings vs. Selective Insurance Group | Copa Holdings vs. Transport International Holdings | Copa Holdings vs. LIFENET INSURANCE CO |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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