Correlation Between Copa Holdings and Playa Hotels
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Playa Hotels 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 Playa Hotels 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 Playa Hotels Resorts, you can compare the effects of market volatilities on Copa Holdings and Playa Hotels 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 Playa Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Playa Hotels.
Diversification Opportunities for Copa Holdings and Playa Hotels
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Playa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Playa Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playa Hotels Resorts 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 Playa Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playa Hotels Resorts has no effect on the direction of Copa Holdings i.e., Copa Holdings and Playa Hotels go up and down completely randomly.
Pair Corralation between Copa Holdings and Playa Hotels
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Playa Hotels. In addition to that, Copa Holdings is 1.51 times more volatile than Playa Hotels Resorts. It trades about -0.1 of its total potential returns per unit of risk. Playa Hotels Resorts is currently generating about 0.25 per unit of volatility. If you would invest 872.00 in Playa Hotels Resorts on August 27, 2024 and sell it today you would earn a total of 100.00 from holding Playa Hotels Resorts or generate 11.47% 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. Playa Hotels Resorts
Performance |
| Timeline |
| Copa Holdings SA |
| Playa Hotels Resorts |
Copa Holdings and Playa Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Playa Hotels
The main advantage of trading using opposite Copa Holdings and Playa Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Playa Hotels 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 Playa Hotels will offset losses from the drop in Playa Hotels' long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Playa Hotels vs. Yatra Online | Playa Hotels vs. Mondee Holdings | Playa Hotels vs. Tuniu Corp | Playa Hotels vs. TripAdvisor |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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