Correlation Between Copa Holdings and Gol Linhas
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Gol Linhas 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 Gol Linhas 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 Gol Linhas Aereas, you can compare the effects of market volatilities on Copa Holdings and Gol Linhas 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 Gol Linhas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Gol Linhas.
Diversification Opportunities for Copa Holdings and Gol Linhas
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Copa and Gol is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Gol Linhas Aereas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gol Linhas Aereas 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 Gol Linhas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gol Linhas Aereas has no effect on the direction of Copa Holdings i.e., Copa Holdings and Gol Linhas go up and down completely randomly.
Pair Corralation between Copa Holdings and Gol Linhas
Considering the 90-day investment horizon Copa Holdings is expected to generate 7.29 times less return on investment than Gol Linhas. But when comparing it to its historical volatility, Copa Holdings SA is 2.71 times less risky than Gol Linhas. It trades about 0.03 of its potential returns per unit of risk. Gol Linhas Aereas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 290.00 in Gol Linhas Aereas on August 24, 2024 and sell it today you would earn a total of 148.00 from holding Gol Linhas Aereas or generate 51.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 32.12% |
| Values | Daily Returns |
Copa Holdings SA vs. Gol Linhas Aereas
Performance |
| Timeline |
| Copa Holdings SA |
| Gol Linhas Aereas |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Copa Holdings and Gol Linhas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Gol Linhas
The main advantage of trading using opposite Copa Holdings and Gol Linhas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Gol Linhas 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 Gol Linhas will offset losses from the drop in Gol Linhas' long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Gol Linhas vs. Azul SA | Gol Linhas vs. Air France KLM | Gol Linhas vs. Copa Holdings SA | Gol Linhas vs. International Consolidated Airlines |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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