Correlation Between Kinetik Holdings and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Kinetik Holdings 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 Kinetik Holdings and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetik Holdings and Encore Capital Group, you can compare the effects of market volatilities on Kinetik Holdings 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 Kinetik Holdings with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetik Holdings and Encore Capital.
Diversification Opportunities for Kinetik Holdings and Encore Capital
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kinetik and Encore is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings 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 Kinetik Holdings 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 Kinetik Holdings 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 Kinetik Holdings i.e., Kinetik Holdings and Encore Capital go up and down completely randomly.
Pair Corralation between Kinetik Holdings and Encore Capital
Given the investment horizon of 90 days Kinetik Holdings is expected to generate 0.77 times more return on investment than Encore Capital. However, Kinetik Holdings is 1.3 times less risky than Encore Capital. It trades about 0.15 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.02 per unit of risk. If you would invest 3,181 in Kinetik Holdings on September 4, 2024 and sell it today you would earn a total of 2,560 from holding Kinetik Holdings or generate 80.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetik Holdings vs. Encore Capital Group
Performance |
| Timeline |
| Kinetik Holdings |
| Encore Capital Group |
Kinetik Holdings and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetik Holdings and Encore Capital
The main advantage of trading using opposite Kinetik Holdings and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetik Holdings 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.| Kinetik Holdings vs. Western Midstream Partners | Kinetik Holdings vs. DT Midstream | Kinetik Holdings vs. MPLX LP | Kinetik Holdings vs. Hess Midstream Partners |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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