Correlation Between Encore Capital and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Encore Capital and KeyCorp 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 Encore Capital and KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Capital Group and KeyCorp, you can compare the effects of market volatilities on Encore Capital and KeyCorp 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 Encore Capital with a short position of KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and KeyCorp.
Diversification Opportunities for Encore Capital and KeyCorp
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Encore and KeyCorp is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp and Encore Capital 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 Encore Capital Group are associated (or correlated) with KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Encore Capital i.e., Encore Capital and KeyCorp go up and down completely randomly.
Pair Corralation between Encore Capital and KeyCorp
Given the investment horizon of 90 days Encore Capital is expected to generate 6.28 times less return on investment than KeyCorp. In addition to that, Encore Capital is 2.14 times more volatile than KeyCorp. It trades about 0.01 of its total potential returns per unit of risk. KeyCorp is currently generating about 0.07 per unit of volatility. If you would invest 2,100 in KeyCorp on November 5, 2024 and sell it today you would earn a total of 361.00 from holding KeyCorp or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. KeyCorp
Performance |
| Timeline |
| Encore Capital Group |
| KeyCorp |
Encore Capital and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and KeyCorp
The main advantage of trading using opposite Encore Capital and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |