Correlation Between Mediag3 and Encore Capital

Can any of the company-specific risk be diversified away by investing in both Mediag3 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 Mediag3 and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mediag3 and Encore Capital Group, you can compare the effects of market volatilities on Mediag3 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 Mediag3 with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mediag3 and Encore Capital.

Diversification Opportunities for Mediag3 and Encore Capital

0.0

Correlation Coefficient

Mediag3  Encore Capital

Pay attention - limited upside

The 3 months correlation between Mediag3 and Encore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mediag3 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 Mediag3 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 Mediag3 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 Mediag3 i.e., Mediag3 and Encore Capital go up and down completely randomly.

Pair Corralation between Mediag3 and Encore Capital

If you would invest  0.01  in Mediag3 on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Mediag3 or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mediag3  vs.  Encore Capital Group

Mediag3

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mediag3 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mediag3 is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Encore Capital Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 1 (%) 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.

Pair Trading with Mediag3 and Encore Capital

The main advantage of trading using opposite Mediag3 and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mediag3 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 Mediag3 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.