Correlation Between Encore Capital and Sysco

Can any of the company-specific risk be diversified away by investing in both Encore Capital and Sysco 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 Sysco 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 Sysco, you can compare the effects of market volatilities on Encore Capital and Sysco 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 Sysco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Sysco.

Diversification Opportunities for Encore Capital and Sysco

0.51

Correlation Coefficient

Encore Capital  Sysco

Very weak diversification

The 3 months correlation between Encore and Sysco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco 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 Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of Encore Capital i.e., Encore Capital and Sysco go up and down completely randomly.

Pair Corralation between Encore Capital and Sysco

Given the investment horizon of 90 days Encore Capital is expected to generate 1.23 times less return on investment than Sysco. In addition to that, Encore Capital is 1.8 times more volatile than Sysco. It trades about 0.01 of its total potential returns per unit of risk. Sysco is currently generating about 0.03 per unit of volatility. If you would invest  7,228  in Sysco on October 26, 2024 and sell it today you would earn a total of  215.00  from holding Sysco or generate 2.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Encore Capital Group  vs.  Sysco

Encore Capital Group

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Encore Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sysco

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Sysco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sysco is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Encore Capital and Sysco

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

The idea behind Encore Capital Group and Sysco 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.