Correlation Between Copa Holdings and Stepstone
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Stepstone 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 Stepstone 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 Stepstone Group, you can compare the effects of market volatilities on Copa Holdings and Stepstone 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 Stepstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Stepstone.
Diversification Opportunities for Copa Holdings and Stepstone
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Copa and Stepstone is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Stepstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepstone 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 Stepstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepstone Group has no effect on the direction of Copa Holdings i.e., Copa Holdings and Stepstone go up and down completely randomly.
Pair Corralation between Copa Holdings and Stepstone
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Stepstone. In addition to that, Copa Holdings is 1.05 times more volatile than Stepstone Group. It trades about -0.05 of its total potential returns per unit of risk. Stepstone Group is currently generating about 0.19 per unit of volatility. If you would invest 5,900 in Stepstone Group on September 2, 2024 and sell it today you would earn a total of 689.00 from holding Stepstone Group or generate 11.68% 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. Stepstone Group
Performance |
| Timeline |
| Copa Holdings SA |
| Stepstone Group |
Copa Holdings and Stepstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Stepstone
The main advantage of trading using opposite Copa Holdings and Stepstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Stepstone 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 Stepstone will offset losses from the drop in Stepstone's long position.| Copa Holdings vs. Canadian Pacific Railway | Copa Holdings vs. Werner Enterprises | Copa Holdings vs. Canadian National Railway | Copa Holdings vs. CSX Corporation |
| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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