Correlation Between IMCD NV and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both IMCD NV 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 IMCD NV and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMCD NV and Copa Holdings SA, you can compare the effects of market volatilities on IMCD NV 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 IMCD NV with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMCD NV and Copa Holdings.
Diversification Opportunities for IMCD NV and Copa Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between IMCD and Copa is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding IMCD NV 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 IMCD NV 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 IMCD NV 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 IMCD NV i.e., IMCD NV and Copa Holdings go up and down completely randomly.
Pair Corralation between IMCD NV and Copa Holdings
Assuming the 90 days horizon IMCD NV is expected to generate 0.52 times more return on investment than Copa Holdings. However, IMCD NV is 1.91 times less risky than Copa Holdings. It trades about 0.01 of its potential returns per unit of risk. Copa Holdings SA is currently generating about -0.23 per unit of risk. If you would invest 7,260 in IMCD NV on September 21, 2024 and sell it today you would lose (4.00) from holding IMCD NV or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMCD NV vs. Copa Holdings SA
Performance |
| Timeline |
| IMCD NV |
| Copa Holdings SA |
IMCD NV and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMCD NV and Copa Holdings
The main advantage of trading using opposite IMCD NV and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMCD NV 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.| IMCD NV vs. Copa Holdings SA | IMCD NV vs. United Airlines Holdings | IMCD NV vs. Delta Air Lines | IMCD NV vs. SkyWest |
| Copa Holdings vs. SkyWest | Copa Holdings vs. Sun Country Airlines | Copa Holdings vs. Air Transport Services | Copa Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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