Correlation Between Copa Holdings and POWR Lithium
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and POWR Lithium 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 POWR Lithium 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 POWR Lithium Corp, you can compare the effects of market volatilities on Copa Holdings and POWR Lithium 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 POWR Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and POWR Lithium.
Diversification Opportunities for Copa Holdings and POWR Lithium
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Copa and POWR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and POWR Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWR Lithium Corp 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 POWR Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWR Lithium Corp has no effect on the direction of Copa Holdings i.e., Copa Holdings and POWR Lithium go up and down completely randomly.
Pair Corralation between Copa Holdings and POWR Lithium
Considering the 90-day investment horizon Copa Holdings is expected to generate 21.34 times less return on investment than POWR Lithium. But when comparing it to its historical volatility, Copa Holdings SA is 12.98 times less risky than POWR Lithium. It trades about 0.03 of its potential returns per unit of risk. POWR Lithium Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 30.00 in POWR Lithium Corp on September 12, 2024 and sell it today you would lose (25.40) from holding POWR Lithium Corp or give up 84.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.95% |
| Values | Daily Returns |
Copa Holdings SA vs. POWR Lithium Corp
Performance |
| Timeline |
| Copa Holdings SA |
| POWR Lithium Corp |
Copa Holdings and POWR Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and POWR Lithium
The main advantage of trading using opposite Copa Holdings and POWR Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, POWR Lithium 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 POWR Lithium will offset losses from the drop in POWR Lithium's long position.| Copa Holdings vs. Volaris | Copa Holdings vs. flyExclusive, | Copa Holdings vs. Alaska Air Group | Copa Holdings vs. LATAM Airlines Group |
| POWR Lithium vs. Copa Holdings SA | POWR Lithium vs. United Airlines Holdings | POWR Lithium vs. Delta Air Lines | POWR Lithium 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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