Correlation Between Old Republic and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Old Republic 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 Old Republic and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Republic International and Copa Holdings SA, you can compare the effects of market volatilities on Old Republic 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 Old Republic with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Republic and Copa Holdings.
Diversification Opportunities for Old Republic and Copa Holdings
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Old and Copa is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Old Republic International 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 Old Republic 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 Old Republic International 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 Old Republic i.e., Old Republic and Copa Holdings go up and down completely randomly.
Pair Corralation between Old Republic and Copa Holdings
Considering the 90-day investment horizon Old Republic International is expected to generate 0.63 times more return on investment than Copa Holdings. However, Old Republic International is 1.59 times less risky than Copa Holdings. It trades about 0.08 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.02 per unit of risk. If you would invest 2,251 in Old Republic International on September 20, 2024 and sell it today you would earn a total of 1,312 from holding Old Republic International or generate 58.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Republic International vs. Copa Holdings SA
Performance |
| Timeline |
| Old Republic Interna |
| Copa Holdings SA |
Old Republic and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Republic and Copa Holdings
The main advantage of trading using opposite Old Republic and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Republic 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.| Old Republic vs. Axa Equitable Holdings | Old Republic vs. American International Group | Old Republic vs. Arch Capital Group | Old Republic vs. Sun Life Financial |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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