Correlation Between Canadian Pacific and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and Copa Holdings 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 Canadian Pacific and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and Copa Holdings SA, you can compare the effects of market volatilities on Canadian Pacific and Copa Holdings 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 Canadian Pacific with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Copa Holdings.
Diversification Opportunities for Canadian Pacific and Copa Holdings
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Copa is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and Canadian Pacific 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 Canadian Pacific Railway are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Copa Holdings go up and down completely randomly.
Pair Corralation between Canadian Pacific and Copa Holdings
Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the Copa Holdings. In addition to that, Canadian Pacific is 1.04 times more volatile than Copa Holdings SA. It trades about -0.08 of its total potential returns per unit of risk. Copa Holdings SA is currently generating about -0.01 per unit of volatility. If you would invest 9,317 in Copa Holdings SA on November 29, 2024 and sell it today you would lose (50.00) from holding Copa Holdings SA or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. Copa Holdings SA
Performance |
| Timeline |
| Canadian Pacific Railway |
| Copa Holdings SA |
Canadian Pacific and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and Copa Holdings
The main advantage of trading using opposite Canadian Pacific and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake |
| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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