Correlation Between Eagle Point and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Eagle Point and Copa Holdings 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 Eagle Point and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Point Credit and Copa Holdings SA, you can compare the effects of market volatilities on Eagle Point and Copa Holdings 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 Eagle Point with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Point and Copa Holdings.
Diversification Opportunities for Eagle Point and Copa Holdings
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eagle and Copa is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Point Credit and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA and Eagle Point 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 Eagle Point Credit are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Eagle Point i.e., Eagle Point and Copa Holdings go up and down completely randomly.
Pair Corralation between Eagle Point and Copa Holdings
Given the investment horizon of 90 days Eagle Point Credit is expected to generate 0.3 times more return on investment than Copa Holdings. However, Eagle Point Credit is 3.35 times less risky than Copa Holdings. It trades about 0.06 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.01 per unit of risk. If you would invest 2,190 in Eagle Point Credit on September 12, 2024 and sell it today you would earn a total of 253.00 from holding Eagle Point Credit or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Point Credit vs. Copa Holdings SA
Performance |
| Timeline |
| Eagle Point Credit |
| Copa Holdings SA |
Eagle Point and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Point and Copa Holdings
The main advantage of trading using opposite Eagle Point and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Point position performs unexpectedly, Copa Holdings 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.| Eagle Point vs. Copa Holdings SA | Eagle Point vs. United Airlines Holdings | Eagle Point vs. Delta Air Lines | Eagle Point vs. SkyWest |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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