Correlation Between Top Frontier and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Top Frontier 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 Top Frontier and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Frontier Investment and Encore Capital Group, you can compare the effects of market volatilities on Top Frontier 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 Top Frontier with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Frontier and Encore Capital.
Diversification Opportunities for Top Frontier and Encore Capital
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Top and Encore is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Top Frontier Investment 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 Top Frontier 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 Top Frontier Investment 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 Top Frontier i.e., Top Frontier and Encore Capital go up and down completely randomly.
Pair Corralation between Top Frontier and Encore Capital
If you would invest 4,608 in Encore Capital Group on October 26, 2024 and sell it today you would earn a total of 250.00 from holding Encore Capital Group or generate 5.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Top Frontier Investment vs. Encore Capital Group
Performance |
Timeline |
Top Frontier Investment |
Encore Capital Group |
Top Frontier and Encore Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Top Frontier and Encore Capital
The main advantage of trading using opposite Top Frontier and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Frontier 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.Top Frontier vs. SLR Investment Corp | Top Frontier vs. Gladstone Investment | Top Frontier vs. Guangdong Investment Limited | Top Frontier vs. Shenzhen Investment Holdings |
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Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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