Correlation Between Greystone Housing and Encore Capital

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

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

Diversification Opportunities for Greystone Housing and Encore Capital

-0.44

Correlation Coefficient

Greystone Housing  Encore Capital

Very good diversification

The 3 months correlation between Greystone and Encore is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Greystone Housing Impact and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group and Greystone Housing 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 Greystone Housing Impact are associated (or correlated) with Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of Greystone Housing i.e., Greystone Housing and Encore Capital go up and down completely randomly.

Pair Corralation between Greystone Housing and Encore Capital

Considering the 90-day investment horizon Greystone Housing Impact is expected to generate 0.56 times more return on investment than Encore Capital. However, Greystone Housing Impact is 1.8 times less risky than Encore Capital. It trades about 0.18 of its potential returns per unit of risk. Encore Capital Group is currently generating about -0.13 per unit of risk. If you would invest  1,037  in Greystone Housing Impact on December 29, 2024 and sell it today you would earn a total of  239.00  from holding Greystone Housing Impact or generate 23.05% return on investment over 90 days.

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

Greystone Housing Impact  vs.  Encore Capital Group

Greystone Housing Impact

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greystone Housing Impact are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Greystone Housing demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 abnormal 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.

Pair Trading with Greystone Housing and Encore Capital

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

The idea behind Greystone Housing Impact and Encore Capital Group 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.