Correlation Between Copa Holdings and West Red
Can any of the company-specific risk be diversified away by investing in both Copa Holdings and West Red 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 West Red 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 West Red Lake, you can compare the effects of market volatilities on Copa Holdings and West Red 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 West Red. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and West Red.
Diversification Opportunities for Copa Holdings and West Red
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Copa and West is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake 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 West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of Copa Holdings i.e., Copa Holdings and West Red go up and down completely randomly.
Pair Corralation between Copa Holdings and West Red
Considering the 90-day investment horizon Copa Holdings SA is expected to generate 0.91 times more return on investment than West Red. However, Copa Holdings SA is 1.09 times less risky than West Red. It trades about -0.06 of its potential returns per unit of risk. West Red Lake is currently generating about -0.24 per unit of risk. If you would invest 9,572 in Copa Holdings SA on September 13, 2024 and sell it today you would lose (759.00) from holding Copa Holdings SA or give up 7.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Copa Holdings SA vs. West Red Lake
Performance |
| Timeline |
| Copa Holdings SA |
| West Red Lake |
Copa Holdings and West Red Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Copa Holdings and West Red
The main advantage of trading using opposite Copa Holdings and West Red positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, West Red 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 West Red will offset losses from the drop in West Red'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 |
| West Red vs. American Axle Manufacturing | West Red vs. RBC Bearings Incorporated | West Red vs. Toro Co | West Red vs. Brunswick |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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