Correlation Between Copa Holdings and Hawkins
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Hawkins 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 Hawkins 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 Hawkins, you can compare the effects of market volatilities on Copa Holdings and Hawkins 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 Hawkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Hawkins.
Diversification Opportunities for Copa Holdings and Hawkins
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Copa and Hawkins is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Hawkins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawkins 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 Hawkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawkins has no effect on the direction of Copa Holdings i.e., Copa Holdings and Hawkins go up and down completely randomly.
Pair Corralation between Copa Holdings and Hawkins
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Hawkins. But the stock apears to be less risky and, when comparing its historical volatility, Copa Holdings SA is 1.0 times less risky than Hawkins. The stock trades about -0.09 of its potential returns per unit of risk. The Hawkins is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 11,675 in Hawkins on August 28, 2024 and sell it today you would earn a total of 1,872 from holding Hawkins or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Hawkins
Performance |
| Timeline |
| Copa Holdings SA |
| Hawkins |
Copa Holdings and Hawkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Hawkins
The main advantage of trading using opposite Copa Holdings and Hawkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Hawkins 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 Hawkins will offset losses from the drop in Hawkins' long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Hawkins vs. H B Fuller | Hawkins vs. Minerals Technologies | Hawkins vs. Quaker Chemical | Hawkins vs. Oil Dri |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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