Correlation Between Copa Holdings and Jacobs Solutions
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions, you can compare the effects of market volatilities on Copa Holdings and Jacobs Solutions 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 Jacobs Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Jacobs Solutions.
Diversification Opportunities for Copa Holdings and Jacobs Solutions
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Jacobs is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Jacobs Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacobs Solutions 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 Jacobs Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacobs Solutions has no effect on the direction of Copa Holdings i.e., Copa Holdings and Jacobs Solutions go up and down completely randomly.
Pair Corralation between Copa Holdings and Jacobs Solutions
Considering the 90-day investment horizon Copa Holdings is expected to generate 1.58 times less return on investment than Jacobs Solutions. In addition to that, Copa Holdings is 1.44 times more volatile than Jacobs Solutions. It trades about 0.02 of its total potential returns per unit of risk. Jacobs Solutions is currently generating about 0.05 per unit of volatility. If you would invest 10,483 in Jacobs Solutions on September 3, 2024 and sell it today you would earn a total of 3,504 from holding Jacobs Solutions or generate 33.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Jacobs Solutions
Performance |
| Timeline |
| Copa Holdings SA |
| Jacobs Solutions |
Copa Holdings and Jacobs Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Jacobs Solutions
The main advantage of trading using opposite Copa Holdings and Jacobs Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Jacobs Solutions 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 Jacobs Solutions will offset losses from the drop in Jacobs Solutions' long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Jacobs Solutions vs. KBR Inc | Jacobs Solutions vs. Tetra Tech | Jacobs Solutions vs. Fluor | Jacobs Solutions vs. Topbuild Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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