Correlation Between Copa Holdings and Delta Air
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Delta Air 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 Delta Air 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 Delta Air Lines, you can compare the effects of market volatilities on Copa Holdings and Delta Air 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 Delta Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Delta Air.
Diversification Opportunities for Copa Holdings and Delta Air
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Delta is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Delta Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Air Lines 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 Delta Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Air Lines has no effect on the direction of Copa Holdings i.e., Copa Holdings and Delta Air go up and down completely randomly.
Pair Corralation between Copa Holdings and Delta Air
Assuming the 90 days horizon Copa Holdings SA is expected to under-perform the Delta Air. In addition to that, Copa Holdings is 1.2 times more volatile than Delta Air Lines. It trades about -0.06 of its total potential returns per unit of risk. Delta Air Lines is currently generating about 0.08 per unit of volatility. If you would invest 5,790 in Delta Air Lines on September 12, 2024 and sell it today you would earn a total of 180.00 from holding Delta Air Lines or generate 3.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Copa Holdings SA vs. Delta Air Lines
Performance |
| Timeline |
| Copa Holdings SA |
| Delta Air Lines |
Copa Holdings and Delta Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Delta Air
The main advantage of trading using opposite Copa Holdings and Delta Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Delta Air 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 Delta Air will offset losses from the drop in Delta Air's long position.| Copa Holdings vs. DeVry Education Group | Copa Holdings vs. Strategic Education | Copa Holdings vs. INTERCONT HOTELS | Copa Holdings vs. CHINA TONTINE WINES |
| Delta Air vs. RYANAIR HLDGS ADR | Delta Air vs. Ryanair Holdings plc | Delta Air vs. Superior Plus Corp | Delta Air vs. SIVERS SEMICONDUCTORS AB |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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