Correlation Between Uber Technologies and Encore Capital

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Can any of the company-specific risk be diversified away by investing in both Uber Technologies 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 Uber Technologies and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Encore Capital Group, you can compare the effects of market volatilities on Uber Technologies 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 Uber Technologies with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Encore Capital.

Diversification Opportunities for Uber Technologies and Encore Capital

UberEncoreDiversified AwayUberEncoreDiversified Away100%
-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Uber and Encore is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies 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 Uber Technologies 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 Uber Technologies 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 Uber Technologies i.e., Uber Technologies and Encore Capital go up and down completely randomly.

Pair Corralation between Uber Technologies and Encore Capital

Given the investment horizon of 90 days Uber Technologies is expected to under-perform the Encore Capital. In addition to that, Uber Technologies is 1.7 times more volatile than Encore Capital Group. It trades about -0.09 of its total potential returns per unit of risk. Encore Capital Group is currently generating about 0.03 per unit of volatility. If you would invest  4,798  in Encore Capital Group on September 20, 2024 and sell it today you would earn a total of  106.00  from holding Encore Capital Group or generate 2.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Uber Technologies  vs.  Encore Capital Group

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-5051015
JavaScript chart by amCharts 3.21.15UBER ECPG
       Timeline  
Uber Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec606570758085
Encore Capital Group 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec434445464748495051

Uber Technologies and Encore Capital Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.53-3.4-2.26-1.120.01.022.073.124.175.22 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15UBER ECPG
       Returns  

Pair Trading with Uber Technologies and Encore Capital

The main advantage of trading using opposite Uber Technologies and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies 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 Uber Technologies 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 Global Correlations module to find global opportunities by holding instruments from different markets.

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