Correlation Between Encore Capital and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated, you can compare the effects of market volatilities on Encore Capital and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Teleflex Incorporated.
Diversification Opportunities for Encore Capital and Teleflex Incorporated
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and Teleflex is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Encore Capital i.e., Encore Capital and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between Encore Capital and Teleflex Incorporated
Given the investment horizon of 90 days Encore Capital Group is expected to generate 0.55 times more return on investment than Teleflex Incorporated. However, Encore Capital Group is 1.82 times less risky than Teleflex Incorporated. It trades about 0.17 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.25 per unit of risk. If you would invest 4,591 in Encore Capital Group on August 25, 2024 and sell it today you would earn a total of 323.00 from holding Encore Capital Group or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. Teleflex Incorporated
Performance |
| Timeline |
| Encore Capital Group |
| Teleflex Incorporated |
Encore Capital and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Teleflex Incorporated
The main advantage of trading using opposite Encore Capital and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated'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 |
| Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. Alcon AG | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. ICU Medical |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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