Correlation Between Copa Holdings and XTRA Bitcoin
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and XTRA Bitcoin 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 XTRA Bitcoin 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 XTRA Bitcoin, you can compare the effects of market volatilities on Copa Holdings and XTRA Bitcoin 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 XTRA Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and XTRA Bitcoin.
Diversification Opportunities for Copa Holdings and XTRA Bitcoin
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and XTRA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and XTRA Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTRA Bitcoin 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 XTRA Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTRA Bitcoin has no effect on the direction of Copa Holdings i.e., Copa Holdings and XTRA Bitcoin go up and down completely randomly.
Pair Corralation between Copa Holdings and XTRA Bitcoin
Considering the 90-day investment horizon Copa Holdings is expected to generate 8.01 times less return on investment than XTRA Bitcoin. But when comparing it to its historical volatility, Copa Holdings SA is 5.34 times less risky than XTRA Bitcoin. It trades about 0.03 of its potential returns per unit of risk. XTRA Bitcoin is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.18 in XTRA Bitcoin on August 26, 2024 and sell it today you would lose (0.03) from holding XTRA Bitcoin or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. XTRA Bitcoin
Performance |
| Timeline |
| Copa Holdings SA |
| XTRA Bitcoin |
Copa Holdings and XTRA Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and XTRA Bitcoin
The main advantage of trading using opposite Copa Holdings and XTRA Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, XTRA Bitcoin 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 XTRA Bitcoin will offset losses from the drop in XTRA Bitcoin'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 |
| XTRA Bitcoin vs. Copa Holdings SA | XTRA Bitcoin vs. United Airlines Holdings | XTRA Bitcoin vs. Delta Air Lines | XTRA Bitcoin vs. SkyWest |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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