Correlation Between Copa Holdings and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Emerson Radio 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 Emerson Radio 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 Emerson Radio, you can compare the effects of market volatilities on Copa Holdings and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Emerson Radio.
Diversification Opportunities for Copa Holdings and Emerson Radio
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Copa and Emerson is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Copa Holdings i.e., Copa Holdings and Emerson Radio go up and down completely randomly.
Pair Corralation between Copa Holdings and Emerson Radio
Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.65 times more return on investment than Emerson Radio. However, Copa Holdings SA is 1.55 times less risky than Emerson Radio. It trades about 0.03 of its potential returns per unit of risk. Emerson Radio is currently generating about -0.01 per unit of risk. If you would invest 7,561 in Copa Holdings SA on September 4, 2024 and sell it today you would earn a total of 1,533 from holding Copa Holdings SA or generate 20.28% 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. Emerson Radio
Performance |
| Timeline |
| Copa Holdings SA |
| Emerson Radio |
Copa Holdings and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Emerson Radio
The main advantage of trading using opposite Copa Holdings and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Copa Holdings vs. Delta Air Lines | Copa Holdings vs. United Airlines Holdings | Copa Holdings vs. Frontier Group Holdings |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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