Correlation Between Hudson Pacific and Copa Holdings

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

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

Diversification Opportunities for Hudson Pacific and Copa Holdings

0.2

Correlation Coefficient

Hudson Pacific  Copa Holdings

Modest diversification

The 3 months correlation between Hudson and Copa is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties 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 Hudson Pacific 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 Hudson Pacific Properties 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 Hudson Pacific i.e., Hudson Pacific and Copa Holdings go up and down completely randomly.

Pair Corralation between Hudson Pacific and Copa Holdings

Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Copa Holdings. In addition to that, Hudson Pacific is 2.05 times more volatile than Copa Holdings SA. It trades about -0.18 of its total potential returns per unit of risk. Copa Holdings SA is currently generating about -0.07 per unit of volatility. If you would invest  9,741  in Copa Holdings SA on September 22, 2024 and sell it today you would lose (854.00) from holding Copa Holdings SA or give up 8.77% of portfolio value over 90 days.

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

Hudson Pacific Properties  vs.  Copa Holdings SA

Hudson Pacific Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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.

Pair Trading with Hudson Pacific and Copa Holdings

The main advantage of trading using opposite Hudson Pacific and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific 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.

The idea behind Hudson Pacific Properties and Copa Holdings SA 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..