Correlation Between Copa Holdings and Western Asset
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Western Asset 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 Western Asset 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 Western Asset Investment, you can compare the effects of market volatilities on Copa Holdings and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Western Asset.
Diversification Opportunities for Copa Holdings and Western Asset
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Copa and Western is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Copa Holdings i.e., Copa Holdings and Western Asset go up and down completely randomly.
Pair Corralation between Copa Holdings and Western Asset
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Western Asset. In addition to that, Copa Holdings is 10.24 times more volatile than Western Asset Investment. It trades about -0.29 of its total potential returns per unit of risk. Western Asset Investment is currently generating about 0.1 per unit of volatility. If you would invest 1,660 in Western Asset Investment on September 20, 2024 and sell it today you would earn a total of 10.00 from holding Western Asset Investment or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Western Asset Investment
Performance |
| Timeline |
| Copa Holdings SA |
| Western Asset Investment |
Copa Holdings and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Western Asset
The main advantage of trading using opposite Copa Holdings and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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