Correlation Between Copa Holdings and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants, you can compare the effects of market volatilities on Copa Holdings and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and BJs Restaurants.
Diversification Opportunities for Copa Holdings and BJs Restaurants
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Copa and BJs is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Copa Holdings i.e., Copa Holdings and BJs Restaurants go up and down completely randomly.
Pair Corralation between Copa Holdings and BJs Restaurants
Considering the 90-day investment horizon Copa Holdings is expected to generate 1.44 times less return on investment than BJs Restaurants. But when comparing it to its historical volatility, Copa Holdings SA is 1.37 times less risky than BJs Restaurants. It trades about 0.03 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,892 in BJs Restaurants on August 28, 2024 and sell it today you would earn a total of 814.00 from holding BJs Restaurants or generate 28.15% 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. BJs Restaurants
Performance |
| Timeline |
| Copa Holdings SA |
| BJs Restaurants |
Copa Holdings and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and BJs Restaurants
The main advantage of trading using opposite Copa Holdings and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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