Correlation Between Encore Capital and 235825AF3

Can any of the company-specific risk be diversified away by investing in both Encore Capital and 235825AF3 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 235825AF3 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 Dana 5375 percent, you can compare the effects of market volatilities on Encore Capital and 235825AF3 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 235825AF3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and 235825AF3.

Diversification Opportunities for Encore Capital and 235825AF3

0.29

Correlation Coefficient

Encore Capital  235825AF3

Modest diversification

The 3 months correlation between Encore and 235825AF3 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Dana 5375 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana 5375 percent 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 235825AF3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana 5375 percent has no effect on the direction of Encore Capital i.e., Encore Capital and 235825AF3 go up and down completely randomly.

Pair Corralation between Encore Capital and 235825AF3

Given the investment horizon of 90 days Encore Capital Group is expected to under-perform the 235825AF3. In addition to that, Encore Capital is 2.4 times more volatile than Dana 5375 percent. It trades about -0.24 of its total potential returns per unit of risk. Dana 5375 percent is currently generating about -0.24 per unit of volatility. If you would invest  9,990  in Dana 5375 percent on October 12, 2024 and sell it today you would lose (260.00) from holding Dana 5375 percent or give up 2.6% of portfolio value over 90 days.

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

Encore Capital Group  vs.  Dana 5375 percent

Encore Capital Group

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Encore Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dana 5375 percent

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Dana 5375 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 235825AF3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Encore Capital and 235825AF3

The main advantage of trading using opposite Encore Capital and 235825AF3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, 235825AF3 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 235825AF3 will offset losses from the drop in 235825AF3's long position.

The idea behind Encore Capital Group and Dana 5375 percent 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.