Correlation Between RETAIL FOOD and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD 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 RETAIL FOOD and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and Copa Holdings SA, you can compare the effects of market volatilities on RETAIL FOOD 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 RETAIL FOOD with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and Copa Holdings.
Diversification Opportunities for RETAIL FOOD and Copa Holdings
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RETAIL and Copa is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP 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 RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and Copa Holdings go up and down completely randomly.
Pair Corralation between RETAIL FOOD and Copa Holdings
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the Copa Holdings. In addition to that, RETAIL FOOD is 2.2 times more volatile than Copa Holdings SA. It trades about -0.04 of its total potential returns per unit of risk. Copa Holdings SA is currently generating about 0.01 per unit of volatility. If you would invest 8,795 in Copa Holdings SA on December 4, 2024 and sell it today you would earn a total of 5.00 from holding Copa Holdings SA or generate 0.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. Copa Holdings SA
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| Copa Holdings SA |
RETAIL FOOD and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and Copa Holdings
The main advantage of trading using opposite RETAIL FOOD and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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.| RETAIL FOOD vs. Chesapeake Utilities | RETAIL FOOD vs. IBU tec advanced materials | RETAIL FOOD vs. Sumitomo Rubber Industries | RETAIL FOOD vs. Plastic Omnium |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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