Correlation Between Copa Holdings and OFX Group
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and OFX Group 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 OFX Group 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 OFX Group Ltd, you can compare the effects of market volatilities on Copa Holdings and OFX Group 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 OFX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and OFX Group.
Diversification Opportunities for Copa Holdings and OFX Group
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Copa and OFX is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Copa Holdings i.e., Copa Holdings and OFX Group go up and down completely randomly.
Pair Corralation between Copa Holdings and OFX Group
Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.54 times more return on investment than OFX Group. However, Copa Holdings SA is 1.85 times less risky than OFX Group. It trades about 0.03 of its potential returns per unit of risk. OFX Group Ltd is currently generating about 0.01 per unit of risk. If you would invest 7,801 in Copa Holdings SA on August 24, 2024 and sell it today you would earn a total of 1,536 from holding Copa Holdings SA or generate 19.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. OFX Group Ltd
Performance |
| Timeline |
| Copa Holdings SA |
| OFX Group |
Copa Holdings and OFX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and OFX Group
The main advantage of trading using opposite Copa Holdings and OFX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, OFX Group 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 OFX Group will offset losses from the drop in OFX Group'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 |
| OFX Group vs. Copa Holdings SA | OFX Group vs. United Airlines Holdings | OFX Group vs. Delta Air Lines | OFX Group vs. SkyWest |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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