Correlation Between Copa Holdings and Boston Beer

Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Boston Beer 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 Copa Holdings and Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Copa Holdings SA and Boston Beer, you can compare the effects of market volatilities on Copa Holdings and Boston Beer 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 Copa Holdings with a short position of Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Boston Beer.

Diversification Opportunities for Copa Holdings and Boston Beer

0.04

Correlation Coefficient

Copa Holdings  Boston Beer

Significant diversification

The 3 months correlation between Copa and Boston is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer and Copa Holdings 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 Copa Holdings SA are associated (or correlated) with Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Copa Holdings i.e., Copa Holdings and Boston Beer go up and down completely randomly.

Pair Corralation between Copa Holdings and Boston Beer

Considering the 90-day investment horizon Copa Holdings is expected to generate 10.34 times less return on investment than Boston Beer. In addition to that, Copa Holdings is 1.52 times more volatile than Boston Beer. It trades about 0.01 of its total potential returns per unit of risk. Boston Beer is currently generating about 0.1 per unit of volatility. If you would invest  27,458  in Boston Beer on September 23, 2024 and sell it today you would earn a total of  2,819  from holding Boston Beer or generate 10.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Copa Holdings SA  vs.  Boston Beer

Copa Holdings SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copa Holdings SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Copa Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Boston Beer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Copa Holdings and Boston Beer

The main advantage of trading using opposite Copa Holdings and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.

The idea behind Copa Holdings SA and Boston Beer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.