Correlation Between Copa Holdings and 00928QAW1

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Can any of the company-specific risk be diversified away by investing in both Copa Holdings and 00928QAW1 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 00928QAW1 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 AYR 525, you can compare the effects of market volatilities on Copa Holdings and 00928QAW1 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 00928QAW1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and 00928QAW1.

Diversification Opportunities for Copa Holdings and 00928QAW1

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Copa and 00928QAW1 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and AYR 525 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 00928QAW1 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 00928QAW1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 00928QAW1 has no effect on the direction of Copa Holdings i.e., Copa Holdings and 00928QAW1 go up and down completely randomly.

Pair Corralation between Copa Holdings and 00928QAW1

Considering the 90-day investment horizon Copa Holdings SA is expected to generate 1.06 times more return on investment than 00928QAW1. However, Copa Holdings is 1.06 times more volatile than AYR 525. It trades about 0.03 of its potential returns per unit of risk. AYR 525 is currently generating about 0.01 per unit of risk. If you would invest  7,544  in Copa Holdings SA on September 3, 2024 and sell it today you would earn a total of  1,793  from holding Copa Holdings SA or generate 23.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy50.71%
ValuesDaily Returns

Copa Holdings SA  vs.  AYR 525

 Performance 
       Timeline  
Copa Holdings SA 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Copa Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.
00928QAW1 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AYR 525 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for AYR 525 investors.

Copa Holdings and 00928QAW1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Copa Holdings and 00928QAW1

The main advantage of trading using opposite Copa Holdings and 00928QAW1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, 00928QAW1 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 00928QAW1 will offset losses from the drop in 00928QAW1's long position.
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The idea behind Copa Holdings SA and AYR 525 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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