Correlation Between KLA Tencor and Encore Capital
Can any of the company-specific risk be diversified away by investing in both KLA Tencor and Encore Capital 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 KLA Tencor and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KLA Tencor and Encore Capital Group, you can compare the effects of market volatilities on KLA Tencor and Encore Capital 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 KLA Tencor with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of KLA Tencor and Encore Capital.
Diversification Opportunities for KLA Tencor and Encore Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KLA and Encore is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding KLA Tencor and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group and KLA Tencor 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 KLA Tencor are associated (or correlated) with Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of KLA Tencor i.e., KLA Tencor and Encore Capital go up and down completely randomly.
Pair Corralation between KLA Tencor and Encore Capital
Given the investment horizon of 90 days KLA Tencor is expected to under-perform the Encore Capital. In addition to that, KLA Tencor is 1.56 times more volatile than Encore Capital Group. It trades about -0.05 of its total potential returns per unit of risk. Encore Capital Group is currently generating about 0.06 per unit of volatility. 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 |
KLA Tencor vs. Encore Capital Group
Performance |
| Timeline |
| KLA Tencor |
| Encore Capital Group |
KLA Tencor and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KLA Tencor and Encore Capital
The main advantage of trading using opposite KLA Tencor and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KLA Tencor position performs unexpectedly, Encore Capital 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 Encore Capital will offset losses from the drop in Encore Capital's long position.| KLA Tencor vs. Applied Materials | KLA Tencor vs. ASML Holding NV | KLA Tencor vs. Axcelis Technologies | KLA Tencor vs. Teradyne |
| Encore Capital vs. Visa Class A | Encore Capital vs. PayPal Holdings | Encore Capital vs. Upstart Holdings | Encore Capital vs. Mastercard |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |