Correlation Between Encore Capital and MagnaChip Semiconductor
Can any of the company-specific risk be diversified away by investing in both Encore Capital and MagnaChip Semiconductor 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 MagnaChip Semiconductor 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 MagnaChip Semiconductor, you can compare the effects of market volatilities on Encore Capital and MagnaChip Semiconductor 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 MagnaChip Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and MagnaChip Semiconductor.
Diversification Opportunities for Encore Capital and MagnaChip Semiconductor
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Encore and MagnaChip is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor 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 MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of Encore Capital i.e., Encore Capital and MagnaChip Semiconductor go up and down completely randomly.
Pair Corralation between Encore Capital and MagnaChip Semiconductor
Given the investment horizon of 90 days Encore Capital Group is expected to generate 0.62 times more return on investment than MagnaChip Semiconductor. However, Encore Capital Group is 1.62 times less risky than MagnaChip Semiconductor. It trades about 0.06 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.05 per unit of risk. If you would invest 4,587 in Encore Capital Group on September 12, 2024 and sell it today you would earn a total of 294.00 from holding Encore Capital Group or generate 6.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. MagnaChip Semiconductor
Performance |
| Timeline |
| Encore Capital Group |
| MagnaChip Semiconductor |
Encore Capital and MagnaChip Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and MagnaChip Semiconductor
The main advantage of trading using opposite Encore Capital and MagnaChip Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, MagnaChip Semiconductor 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 MagnaChip Semiconductor will offset losses from the drop in MagnaChip Semiconductor's long position.| Encore Capital vs. Visa Class A | Encore Capital vs. PayPal Holdings | Encore Capital vs. Upstart Holdings | Encore Capital vs. Mastercard |
| MagnaChip Semiconductor vs. CEVA Inc | MagnaChip Semiconductor vs. MACOM Technology Solutions | MagnaChip Semiconductor vs. FormFactor | MagnaChip Semiconductor vs. MaxLinear |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stocks Directory Find actively traded stocks across global markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |