Correlation Between Torex Gold and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Torex Gold 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 Torex Gold and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Torex Gold Resources and Encore Capital Group, you can compare the effects of market volatilities on Torex Gold 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 Torex Gold with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torex Gold and Encore Capital.
Diversification Opportunities for Torex Gold and Encore Capital
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Torex and Encore is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Torex Gold Resources 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 Torex Gold 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 Torex Gold Resources 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 Torex Gold i.e., Torex Gold and Encore Capital go up and down completely randomly.
Pair Corralation between Torex Gold and Encore Capital
Assuming the 90 days horizon Torex Gold Resources is expected to under-perform the Encore Capital. In addition to that, Torex Gold is 3.14 times more volatile than Encore Capital Group. It trades about -0.02 of its total potential returns per unit of risk. Encore Capital Group is currently generating about -0.04 per unit of volatility. If you would invest 5,001 in Encore Capital Group on September 12, 2024 and sell it today you would lose (73.00) from holding Encore Capital Group or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Torex Gold Resources vs. Encore Capital Group
Performance |
| Timeline |
| Torex Gold Resources |
| Encore Capital Group |
Torex Gold and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Torex Gold and Encore Capital
The main advantage of trading using opposite Torex Gold and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Torex Gold 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.| Torex Gold vs. National Vision Holdings | Torex Gold vs. Keurig Dr Pepper | Torex Gold vs. Getty Realty | Torex Gold vs. Willamette Valley Vineyards |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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