Correlation Between Encore Capital and ROC Energy

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

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

Diversification Opportunities for Encore Capital and ROC Energy

0.0

Correlation Coefficient

Encore Capital  ROC Energy

Pay attention - limited upside

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

Pair Corralation between Encore Capital and ROC Energy

If you would invest (100.00) in ROC Energy Acquisition on December 27, 2024 and sell it today you would earn a total of  100.00  from holding ROC Energy Acquisition or generate -100.0% return on investment over 90 days.

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

Encore Capital Group  vs.  ROC Energy Acquisition

Encore Capital Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Encore Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ROC Energy Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days ROC Energy Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ROC Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Encore Capital and ROC Energy

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

The idea behind Encore Capital Group and ROC Energy Acquisition 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.