Correlation Between Copa Holdings and Tower Semiconductor
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Tower Semiconductor 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 Tower Semiconductor 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 Tower Semiconductor, you can compare the effects of market volatilities on Copa Holdings and Tower Semiconductor 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 Tower Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Tower Semiconductor.
Diversification Opportunities for Copa Holdings and Tower Semiconductor
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Tower is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Tower Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Semiconductor 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 Tower Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Semiconductor has no effect on the direction of Copa Holdings i.e., Copa Holdings and Tower Semiconductor go up and down completely randomly.
Pair Corralation between Copa Holdings and Tower Semiconductor
Assuming the 90 days horizon Copa Holdings SA is expected to under-perform the Tower Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Copa Holdings SA is 1.54 times less risky than Tower Semiconductor. The stock trades about -0.06 of its potential returns per unit of risk. The Tower Semiconductor is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,799 in Tower Semiconductor on September 4, 2024 and sell it today you would earn a total of 616.00 from holding Tower Semiconductor or generate 16.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Copa Holdings SA vs. Tower Semiconductor
Performance |
| Timeline |
| Copa Holdings SA |
| Tower Semiconductor |
Copa Holdings and Tower Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Tower Semiconductor
The main advantage of trading using opposite Copa Holdings and Tower Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Tower Semiconductor 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 Tower Semiconductor will offset losses from the drop in Tower Semiconductor'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 |
| Tower Semiconductor vs. JD SPORTS FASH | Tower Semiconductor vs. AOI Electronics Co | Tower Semiconductor vs. Universal Entertainment | Tower Semiconductor vs. Methode Electronics |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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