Correlation Between Copa Holdings and Axalta Coating
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Axalta Coating 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 Axalta Coating 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 Axalta Coating Systems, you can compare the effects of market volatilities on Copa Holdings and Axalta Coating 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 Axalta Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Axalta Coating.
Diversification Opportunities for Copa Holdings and Axalta Coating
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Axalta is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Axalta Coating Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axalta Coating Systems 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 Axalta Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axalta Coating Systems has no effect on the direction of Copa Holdings i.e., Copa Holdings and Axalta Coating go up and down completely randomly.
Pair Corralation between Copa Holdings and Axalta Coating
Considering the 90-day investment horizon Copa Holdings is expected to generate 2.89 times less return on investment than Axalta Coating. In addition to that, Copa Holdings is 1.24 times more volatile than Axalta Coating Systems. It trades about 0.02 of its total potential returns per unit of risk. Axalta Coating Systems is currently generating about 0.07 per unit of volatility. If you would invest 3,091 in Axalta Coating Systems on August 24, 2024 and sell it today you would earn a total of 887.00 from holding Axalta Coating Systems or generate 28.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Axalta Coating Systems
Performance |
| Timeline |
| Copa Holdings SA |
| Axalta Coating Systems |
Copa Holdings and Axalta Coating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Axalta Coating
The main advantage of trading using opposite Copa Holdings and Axalta Coating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Axalta Coating 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 Axalta Coating will offset losses from the drop in Axalta Coating'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 |
| Axalta Coating vs. Avient Corp | Axalta Coating vs. H B Fuller | Axalta Coating vs. Quaker Chemical | Axalta Coating vs. Cabot |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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