Correlation Between Copa Holdings and Regeneron Pharmaceuticals

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Can any of the company-specific risk be diversified away by investing in both Copa Holdings and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals, you can compare the effects of market volatilities on Copa Holdings and Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copa Holdings and Regeneron Pharmaceuticals.

Diversification Opportunities for Copa Holdings and Regeneron Pharmaceuticals

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Copa Holdings and Regeneron is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Copa Holdings SA and Regeneron Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regeneron Pharmaceuticals has no effect on the direction of Copa Holdings i.e., Copa Holdings and Regeneron Pharmaceuticals go up and down completely randomly.

Pair Corralation between Copa Holdings and Regeneron Pharmaceuticals

Considering the 90-day investment horizon Copa Holdings is expected to generate 1.03 times less return on investment than Regeneron Pharmaceuticals. In addition to that, Copa Holdings is 1.24 times more volatile than Regeneron Pharmaceuticals. It trades about 0.04 of its total potential returns per unit of risk. Regeneron Pharmaceuticals is currently generating about 0.05 per unit of volatility. If you would invest  63,509  in Regeneron Pharmaceuticals on September 3, 2022 and sell it today you would earn a total of  13,141  from holding Regeneron Pharmaceuticals or generate 20.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.6%
ValuesDaily Returns

Copa Holdings SA  vs.  Regeneron Pharmaceuticals

 Performance (%) 
       Timeline  
Copa Holdings SA 
Copa Holdings Performance
13 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Copa Holdings SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Copa Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Copa Holdings Price Channel

Regeneron Pharmaceuticals 
Regeneron Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Regeneron Pharmaceuticals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Regeneron Pharmaceuticals disclosed solid returns over the last few months and may actually be approaching a breakup point.

Regeneron Price Channel

Copa Holdings and Regeneron Pharmaceuticals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Copa Holdings and Regeneron Pharmaceuticals

The main advantage of trading using opposite Copa Holdings and Regeneron Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copa Holdings position performs unexpectedly, Regeneron Pharmaceuticals 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 Regeneron Pharmaceuticals will offset losses from the drop in Regeneron Pharmaceuticals' long position.
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The idea behind Copa Holdings SA and Regeneron Pharmaceuticals 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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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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