Correlation Between Montauk Renewables and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Montauk Renewables 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 Montauk Renewables and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Copa Holdings SA, you can compare the effects of market volatilities on Montauk Renewables 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 Montauk Renewables with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Copa Holdings.
Diversification Opportunities for Montauk Renewables and Copa Holdings
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Montauk and Copa is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables i.e., Montauk Renewables and Copa Holdings go up and down completely randomly.
Pair Corralation between Montauk Renewables and Copa Holdings
Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Copa Holdings. In addition to that, Montauk Renewables is 1.8 times more volatile than Copa Holdings SA. It trades about -0.19 of its total potential returns per unit of risk. Copa Holdings SA is currently generating about -0.1 per unit of volatility. If you would invest 10,119 in Copa Holdings SA on August 29, 2024 and sell it today you would lose (837.50) from holding Copa Holdings SA or give up 8.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Montauk Renewables vs. Copa Holdings SA
Performance |
| Timeline |
| Montauk Renewables |
| Copa Holdings SA |
Montauk Renewables and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montauk Renewables and Copa Holdings
The main advantage of trading using opposite Montauk Renewables and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables 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.| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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