Correlation Between Encore Capital and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on Encore Capital and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Treasury Wine.
Diversification Opportunities for Encore Capital and Treasury Wine
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and Treasury is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Encore Capital i.e., Encore Capital and Treasury Wine go up and down completely randomly.
Pair Corralation between Encore Capital and Treasury Wine
Given the investment horizon of 90 days Encore Capital Group is expected to generate 0.95 times more return on investment than Treasury Wine. However, Encore Capital Group is 1.05 times less risky than Treasury Wine. It trades about 0.05 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about 0.0 per unit of risk. If you would invest 4,381 in Encore Capital Group on September 1, 2024 and sell it today you would earn a total of 538.00 from holding Encore Capital Group or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Encore Capital Group vs. Treasury Wine Estates
Performance |
| Timeline |
| Encore Capital Group |
| Treasury Wine Estates |
Encore Capital and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Treasury Wine
The main advantage of trading using opposite Encore Capital and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Encore Capital vs. 360 Finance | Encore Capital vs. Atlanticus Holdings | Encore Capital vs. Qudian Inc | Encore Capital vs. Enova International |
| Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Willamette Valley Vineyards | Treasury Wine vs. MGP Ingredients | Treasury Wine vs. Duckhorn Portfolio |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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