Correlation Between Copa Holdings and FirstGroup Plc
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and FirstGroup Plc 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 FirstGroup Plc 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 FirstGroup plc, you can compare the effects of market volatilities on Copa Holdings and FirstGroup Plc 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 FirstGroup Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and FirstGroup Plc.
Diversification Opportunities for Copa Holdings and FirstGroup Plc
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Copa and FirstGroup is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and FirstGroup plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstGroup plc 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 FirstGroup Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstGroup plc has no effect on the direction of Copa Holdings i.e., Copa Holdings and FirstGroup Plc go up and down completely randomly.
Pair Corralation between Copa Holdings and FirstGroup Plc
Assuming the 90 days horizon Copa Holdings is expected to generate 1.74 times less return on investment than FirstGroup Plc. In addition to that, Copa Holdings is 1.08 times more volatile than FirstGroup plc. It trades about 0.03 of its total potential returns per unit of risk. FirstGroup plc is currently generating about 0.06 per unit of volatility. If you would invest 107.00 in FirstGroup plc on September 4, 2024 and sell it today you would earn a total of 75.00 from holding FirstGroup plc or generate 70.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. FirstGroup plc
Performance |
| Timeline |
| Copa Holdings SA |
| FirstGroup plc |
Copa Holdings and FirstGroup Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and FirstGroup Plc
The main advantage of trading using opposite Copa Holdings and FirstGroup Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, FirstGroup Plc 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 FirstGroup Plc will offset losses from the drop in FirstGroup Plc's long position.| Copa Holdings vs. Delta Air Lines | Copa Holdings vs. AIR CHINA LTD | Copa Holdings vs. RYANAIR HLDGS ADR | Copa Holdings vs. Southwest Airlines Co |
| FirstGroup Plc vs. Motorcar Parts of | FirstGroup Plc vs. CENTURIA OFFICE REIT | FirstGroup Plc vs. CarsalesCom | FirstGroup Plc vs. Tri Pointe Homes |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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