Correlation Between Copa Holdings and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Copa Holdings and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Volkswagen.
Diversification Opportunities for Copa Holdings and Volkswagen
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Copa and Volkswagen is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Copa Holdings i.e., Copa Holdings and Volkswagen go up and down completely randomly.
Pair Corralation between Copa Holdings and Volkswagen
Assuming the 90 days horizon Copa Holdings SA is expected to generate 1.41 times more return on investment than Volkswagen. However, Copa Holdings is 1.41 times more volatile than Volkswagen AG. It trades about 0.02 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.02 per unit of risk. If you would invest 7,368 in Copa Holdings SA on August 28, 2024 and sell it today you would earn a total of 1,182 from holding Copa Holdings SA or generate 16.04% 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. Volkswagen AG
Performance |
| Timeline |
| Copa Holdings SA |
| Volkswagen AG |
Copa Holdings and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Volkswagen
The main advantage of trading using opposite Copa Holdings and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Copa Holdings vs. SPARTAN STORES | Copa Holdings vs. Fast Retailing Co | Copa Holdings vs. Salesforce | Copa Holdings vs. SALESFORCE INC CDR |
| Volkswagen vs. Elmos Semiconductor SE | Volkswagen vs. CapitaLand Investment Limited | Volkswagen vs. ON SEMICONDUCTOR | Volkswagen vs. PennantPark Investment |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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