Correlation Between Copa Holdings and Ituran Location
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Ituran Location 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 Ituran Location 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 Ituran Location and, you can compare the effects of market volatilities on Copa Holdings and Ituran Location 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 Ituran Location. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Ituran Location.
Diversification Opportunities for Copa Holdings and Ituran Location
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Copa and Ituran is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Ituran Location and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ituran Location 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 Ituran Location. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ituran Location has no effect on the direction of Copa Holdings i.e., Copa Holdings and Ituran Location go up and down completely randomly.
Pair Corralation between Copa Holdings and Ituran Location
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Ituran Location. In addition to that, Copa Holdings is 2.07 times more volatile than Ituran Location and. It trades about -0.11 of its total potential returns per unit of risk. Ituran Location and is currently generating about 0.34 per unit of volatility. If you would invest 2,780 in Ituran Location and on September 12, 2024 and sell it today you would earn a total of 324.00 from holding Ituran Location and or generate 11.65% 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. Ituran Location and
Performance |
| Timeline |
| Copa Holdings SA |
| Ituran Location |
Copa Holdings and Ituran Location Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Ituran Location
The main advantage of trading using opposite Copa Holdings and Ituran Location positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Ituran Location 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 Ituran Location will offset losses from the drop in Ituran Location's long position.| Copa Holdings vs. Volaris | Copa Holdings vs. flyExclusive, | Copa Holdings vs. Alaska Air Group | Copa Holdings vs. LATAM Airlines Group |
| Ituran Location vs. Silicom | Ituran Location vs. Allot Communications | Ituran Location vs. Sapiens International | Ituran Location vs. Formula Systems 1985 |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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