Correlation Between Constellation Brands and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Constellation Brands 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 Constellation Brands and Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Brands Class and Copa Holdings SA, you can compare the effects of market volatilities on Constellation Brands 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 Constellation Brands with a short position of Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Copa Holdings.
Diversification Opportunities for Constellation Brands and Copa Holdings
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Constellation and Copa is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands Class 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 Constellation Brands 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 Constellation Brands Class 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 Constellation Brands i.e., Constellation Brands and Copa Holdings go up and down completely randomly.
Pair Corralation between Constellation Brands and Copa Holdings
Considering the 90-day investment horizon Constellation Brands Class is expected to generate 0.44 times more return on investment than Copa Holdings. However, Constellation Brands Class is 2.26 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 -0.07 per unit of risk. If you would invest 23,873 in Constellation Brands Class on September 4, 2024 and sell it today you would lose (97.00) from holding Constellation Brands Class or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands Class vs. Copa Holdings SA
Performance |
| Timeline |
| Constellation Brands |
| Copa Holdings SA |
Constellation Brands and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Copa Holdings
The main advantage of trading using opposite Constellation Brands and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands 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.| Constellation Brands vs. Brown Forman | Constellation Brands vs. Duckhorn Portfolio | Constellation Brands vs. MGP Ingredients | Constellation Brands vs. Brown Forman |
| Copa Holdings vs. Delta Air Lines | Copa Holdings vs. United Airlines Holdings | 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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