Correlation Between Encore Wire and Altaba

Can any of the company-specific risk be diversified away by investing in both Encore Wire and Altaba 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 Encore Wire and Altaba into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Encore Wire and Altaba Inc, you can compare the effects of market volatilities on Encore Wire and Altaba 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 Encore Wire with a short position of Altaba. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Wire and Altaba.

Diversification Opportunities for Encore Wire and Altaba

0.0

Correlation Coefficient

Encore Wire  Altaba

Pay attention - limited upside

The 3 months correlation between Encore and Altaba is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Encore Wire and Altaba Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altaba Inc and Encore Wire 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 Encore Wire are associated (or correlated) with Altaba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altaba Inc has no effect on the direction of Encore Wire i.e., Encore Wire and Altaba go up and down completely randomly.

Pair Corralation between Encore Wire and Altaba

If you would invest  26,865  in Encore Wire on February 5, 2024 and sell it today you would earn a total of  1,439  from holding Encore Wire or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Encore Wire  vs.  Altaba Inc

Encore Wire

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Wire are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Encore Wire exhibited solid returns over the last few months and may actually be approaching a breakup point.

Altaba Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altaba Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Altaba is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Encore Wire and Altaba

The main advantage of trading using opposite Encore Wire and Altaba positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Wire position performs unexpectedly, Altaba 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 Altaba will offset losses from the drop in Altaba's long position.

The idea behind Encore Wire and Altaba Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.