Correlation Between Teleflex Incorporated and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Teleflex Incorporated 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 Teleflex Incorporated and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teleflex Incorporated and Encore Capital Group, you can compare the effects of market volatilities on Teleflex Incorporated 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 Teleflex Incorporated with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teleflex Incorporated and Encore Capital.
Diversification Opportunities for Teleflex Incorporated and Encore Capital
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Teleflex and Encore is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated i.e., Teleflex Incorporated and Encore Capital go up and down completely randomly.
Pair Corralation between Teleflex Incorporated and Encore Capital
Considering the 90-day investment horizon Teleflex Incorporated is expected to under-perform the Encore Capital. But the stock apears to be less risky and, when comparing its historical volatility, Teleflex Incorporated is 1.2 times less risky than Encore Capital. The stock trades about -0.03 of its potential returns per unit of risk. The Encore Capital Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,168 in Encore Capital Group on November 19, 2024 and sell it today you would lose (168.00) from holding Encore Capital Group or give up 3.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teleflex Incorporated vs. Encore Capital Group
Performance |
| Timeline |
| Teleflex Incorporated |
| Encore Capital Group |
Teleflex Incorporated and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teleflex Incorporated and Encore Capital
The main advantage of trading using opposite Teleflex Incorporated and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teleflex Incorporated 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.| Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. Alcon AG | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. ICU Medical |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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