Correlation Between Copa Holdings and Manulife Financial
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Manulife Financial 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 Manulife Financial 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 Manulife Financial, you can compare the effects of market volatilities on Copa Holdings and Manulife Financial 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 Manulife Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Manulife Financial.
Diversification Opportunities for Copa Holdings and Manulife Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Manulife is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Manulife Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manulife Financial 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 Manulife Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manulife Financial has no effect on the direction of Copa Holdings i.e., Copa Holdings and Manulife Financial go up and down completely randomly.
Pair Corralation between Copa Holdings and Manulife Financial
Assuming the 90 days horizon Copa Holdings SA is expected to under-perform the Manulife Financial. In addition to that, Copa Holdings is 1.9 times more volatile than Manulife Financial. It trades about -0.06 of its total potential returns per unit of risk. Manulife Financial is currently generating about 0.4 per unit of volatility. If you would invest 2,643 in Manulife Financial on September 4, 2024 and sell it today you would earn a total of 390.00 from holding Manulife Financial or generate 14.76% 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. Manulife Financial
Performance |
| Timeline |
| Copa Holdings SA |
| Manulife Financial |
Copa Holdings and Manulife Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Manulife Financial
The main advantage of trading using opposite Copa Holdings and Manulife Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Manulife Financial 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 Manulife Financial will offset losses from the drop in Manulife Financial'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 |
| Manulife Financial vs. Iridium Communications | Manulife Financial vs. Shin Etsu Chemical Co | Manulife Financial vs. Zoom Video Communications | Manulife Financial vs. AIR PRODCHEMICALS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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