Correlation Between Copa Holdings and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Alaska 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 Alaska 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 Alaska Air Group, you can compare the effects of market volatilities on Copa Holdings and Alaska 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 Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Alaska Air.
Diversification Opportunities for Copa Holdings and Alaska Air
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Copa and Alaska is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Copa Holdings i.e., Copa Holdings and Alaska Air go up and down completely randomly.
Pair Corralation between Copa Holdings and Alaska Air
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Alaska Air. In addition to that, Copa Holdings is 1.49 times more volatile than Alaska Air Group. It trades about -0.07 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.27 per unit of volatility. If you would invest 4,598 in Alaska Air Group on August 23, 2024 and sell it today you would earn a total of 632.00 from holding Alaska Air Group or generate 13.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Alaska Air Group
Performance |
| Timeline |
| Copa Holdings SA |
| Alaska Air Group |
Copa Holdings and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Alaska Air
The main advantage of trading using opposite Copa Holdings and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Alaska 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Alaska Air vs. Delta Air Lines | Alaska Air vs. United Airlines Holdings | Alaska Air vs. American Airlines Group | Alaska Air vs. JetBlue Airways Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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