Correlation Between Copa Holdings and Volaris
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Volaris 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 Volaris 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 Volaris, you can compare the effects of market volatilities on Copa Holdings and Volaris 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 Volaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Volaris.
Diversification Opportunities for Copa Holdings and Volaris
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Copa and Volaris is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Volaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volaris 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 Volaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volaris has no effect on the direction of Copa Holdings i.e., Copa Holdings and Volaris go up and down completely randomly.
Pair Corralation between Copa Holdings and Volaris
Considering the 90-day investment horizon Copa Holdings is expected to generate 1.7 times less return on investment than Volaris. But when comparing it to its historical volatility, Copa Holdings SA is 1.23 times less risky than Volaris. It trades about 0.3 of its potential returns per unit of risk. Volaris is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 740.00 in Volaris on November 2, 2024 and sell it today you would earn a total of 136.00 from holding Volaris or generate 18.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Copa Holdings SA vs. Volaris
Performance |
| Timeline |
| Copa Holdings SA |
| Volaris |
Copa Holdings and Volaris Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and Volaris
The main advantage of trading using opposite Copa Holdings and Volaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Volaris 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 Volaris will offset losses from the drop in Volaris' long position.| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings vs. Frontier Group Holdings |
| Volaris vs. Southwest Airlines | Volaris vs. JetBlue Airways Corp | Volaris vs. United Airlines Holdings | Volaris vs. Frontier Group Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
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