Correlation Between Encore Capital and MQGAU

Can any of the company-specific risk be diversified away by investing in both Encore Capital and MQGAU 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 MQGAU 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 MQGAU 5376057 23 SEP 27, you can compare the effects of market volatilities on Encore Capital and MQGAU 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 MQGAU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and MQGAU.

Diversification Opportunities for Encore Capital and MQGAU

0.09

Correlation Coefficient

Encore Capital  MQGAU

Significant diversification

The 3 months correlation between Encore and MQGAU is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and MQGAU 5376057 23 SEP 27 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MQGAU 5376057 23 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 MQGAU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MQGAU 5376057 23 has no effect on the direction of Encore Capital i.e., Encore Capital and MQGAU go up and down completely randomly.

Pair Corralation between Encore Capital and MQGAU

Given the investment horizon of 90 days Encore Capital Group is expected to generate 17.7 times more return on investment than MQGAU. However, Encore Capital is 17.7 times more volatile than MQGAU 5376057 23 SEP 27. It trades about 0.03 of its potential returns per unit of risk. MQGAU 5376057 23 SEP 27 is currently generating about 0.13 per unit of risk. If you would invest  4,794  in Encore Capital Group on September 14, 2024 and sell it today you would earn a total of  129.00  from holding Encore Capital Group or generate 2.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	31.25%
Values	Daily Returns

Encore Capital Group  vs.  MQGAU 5376057 23 SEP 27

Encore Capital Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 2 (%) 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.

MQGAU 5376057 23

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MQGAU 5376057 23 SEP 27 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MQGAU 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 Capital and MQGAU

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

The idea behind Encore Capital Group and MQGAU 5376057 23 SEP 27 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.