Correlation Between Copa Holdings and Arm Holdings
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Arm 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 Copa Holdings and Arm Holdings 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 Arm Holdings plc, you can compare the effects of market volatilities on Copa Holdings and Arm 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 Copa Holdings with a short position of Arm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Arm Holdings.
Diversification Opportunities for Copa Holdings and Arm Holdings
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Copa and Arm is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Arm Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arm Holdings plc 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 Arm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arm Holdings plc has no effect on the direction of Copa Holdings i.e., Copa Holdings and Arm Holdings go up and down completely randomly.
Pair Corralation between Copa Holdings and Arm Holdings
Considering the 90-day investment horizon Copa Holdings SA is expected to generate 1.21 times more return on investment than Arm Holdings. However, Copa Holdings is 1.21 times more volatile than Arm Holdings plc. It trades about -0.05 of its potential returns per unit of risk. Arm Holdings plc is currently generating about -0.08 per unit of risk. If you would invest 9,730 in Copa Holdings SA on September 1, 2024 and sell it today you would lose (393.00) from holding Copa Holdings SA or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Arm Holdings plc
Performance |
| Timeline |
| Copa Holdings SA |
| Arm Holdings plc |
Copa Holdings and Arm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Arm Holdings
The main advantage of trading using opposite Copa Holdings and Arm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Arm 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 Arm Holdings will offset losses from the drop in Arm Holdings' long position.| Copa Holdings vs. Canadian Pacific Railway | Copa Holdings vs. Volaris | Copa Holdings vs. Werner Enterprises | Copa Holdings vs. Canadian National Railway |
| Arm Holdings vs. ArcelorMittal SA ADR | Arm Holdings vs. Sanyo Special Steel | Arm Holdings vs. United States Steel | Arm Holdings vs. CECO Environmental 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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