Correlation Between Copa Holdings and Union Pacific
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Union Pacific 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 Union Pacific 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 Union Pacific, you can compare the effects of market volatilities on Copa Holdings and Union Pacific 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 Union Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Union Pacific.
Diversification Opportunities for Copa Holdings and Union Pacific
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Copa and Union is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Union Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pacific 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 Union Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pacific has no effect on the direction of Copa Holdings i.e., Copa Holdings and Union Pacific go up and down completely randomly.
Pair Corralation between Copa Holdings and Union Pacific
Considering the 90-day investment horizon Copa Holdings SA is expected to under-perform the Union Pacific. In addition to that, Copa Holdings is 1.64 times more volatile than Union Pacific. It trades about -0.1 of its total potential returns per unit of risk. Union Pacific is currently generating about -0.01 per unit of volatility. If you would invest 24,135 in Union Pacific on August 24, 2024 and sell it today you would lose (233.00) from holding Union Pacific or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Union Pacific
Performance |
| Timeline |
| Copa Holdings SA |
| Union Pacific |
Copa Holdings and Union Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Union Pacific
The main advantage of trading using opposite Copa Holdings and Union Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Union Pacific 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 Union Pacific will offset losses from the drop in Union Pacific's long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Union Pacific vs. Norfolk Southern | Union Pacific vs. CSX Corporation | Union Pacific vs. United Parcel Service | Union Pacific vs. Canadian National Railway |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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