Correlation Between Copa Holdings and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Copa Holdings and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Summit Materials.
Diversification Opportunities for Copa Holdings and Summit Materials
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Copa and Summit is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Copa Holdings i.e., Copa Holdings and Summit Materials go up and down completely randomly.
Pair Corralation between Copa Holdings and Summit Materials
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Summit Materials. But the stock apears to be less risky and, when comparing its historical volatility, Copa Holdings SA is 1.14 times less risky than Summit Materials. The stock trades about 0.0 of its potential returns per unit of risk. The Summit Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,843 in Summit Materials on August 31, 2024 and sell it today you would earn a total of 1,251 from holding Summit Materials or generate 32.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Summit Materials
Performance |
| Timeline |
| Copa Holdings SA |
| Summit Materials |
Copa Holdings and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Summit Materials
The main advantage of trading using opposite Copa Holdings and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Copa Holdings vs. JetBlue Airways Corp | Copa Holdings vs. Allegiant Travel | Copa Holdings vs. SkyWest | Copa Holdings vs. Air Transport Services |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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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