Correlation Between Treasury Wine and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Treasury Wine 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 Treasury Wine and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Treasury Wine Estates and Encore Capital Group, you can compare the effects of market volatilities on Treasury Wine 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 Treasury Wine with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Treasury Wine and Encore Capital.
Diversification Opportunities for Treasury Wine and Encore Capital
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Treasury and Encore is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Treasury Wine Estates 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 Treasury Wine 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 Treasury Wine Estates 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 Treasury Wine i.e., Treasury Wine and Encore Capital go up and down completely randomly.
Pair Corralation between Treasury Wine and Encore Capital
Assuming the 90 days horizon Treasury Wine Estates is expected to under-perform the Encore Capital. In addition to that, Treasury Wine is 1.05 times more volatile than Encore Capital Group. It trades about 0.0 of its total potential returns per unit of risk. Encore Capital Group is currently generating about 0.05 per unit of volatility. 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 |
Treasury Wine Estates vs. Encore Capital Group
Performance |
| Timeline |
| Treasury Wine Estates |
| Encore Capital Group |
Treasury Wine and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Treasury Wine and Encore Capital
The main advantage of trading using opposite Treasury Wine and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Treasury Wine 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.| Treasury Wine vs. Pernod Ricard SA | Treasury Wine vs. Willamette Valley Vineyards | Treasury Wine vs. MGP Ingredients | Treasury Wine vs. Duckhorn Portfolio |
| Encore Capital vs. 360 Finance | Encore Capital vs. Atlanticus Holdings | Encore Capital vs. Qudian Inc | Encore Capital vs. Enova International |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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