Correlation Between Copa Holdings and United Parks
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on Copa Holdings and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and United Parks.
Diversification Opportunities for Copa Holdings and United Parks
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Copa and United is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Copa Holdings i.e., Copa Holdings and United Parks go up and down completely randomly.
Pair Corralation between Copa Holdings and United Parks
Considering the 90-day investment horizon Copa Holdings is expected to generate 4.1 times less return on investment than United Parks. In addition to that, Copa Holdings is 1.07 times more volatile than United Parks Resorts. It trades about 0.02 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.11 per unit of volatility. If you would invest 5,007 in United Parks Resorts on September 12, 2024 and sell it today you would earn a total of 687.00 from holding United Parks Resorts or generate 13.72% 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. United Parks Resorts
Performance |
| Timeline |
| Copa Holdings SA |
| United Parks Resorts |
Copa Holdings and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and United Parks
The main advantage of trading using opposite Copa Holdings and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Copa Holdings vs. Volaris | Copa Holdings vs. flyExclusive, | Copa Holdings vs. Alaska Air Group | Copa Holdings vs. Delta Air Lines |
| United Parks vs. Corsair Gaming | United Parks vs. Sonida Senior Living | United Parks vs. Omni Health | United Parks vs. RadNet Inc |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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