Correlation Between NESNVX and Encore Capital

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

By analyzing existing cross correlation between NESNVX 1875 14 SEP 31 and Encore Capital Group, you can compare the effects of market volatilities on NESNVX 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 NESNVX with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NESNVX and Encore Capital.

Diversification Opportunities for NESNVX and Encore Capital

0.32

Correlation Coefficient

NESNVX  Encore Capital

Weak diversification

The 3 months correlation between NESNVX and Encore is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NESNVX 1875 14 SEP 31 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 NESNVX 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 NESNVX 1875 14 SEP 31 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 NESNVX i.e., NESNVX and Encore Capital go up and down completely randomly.

Pair Corralation between NESNVX and Encore Capital

Assuming the 90 days trading horizon NESNVX 1875 14 SEP 31 is expected to generate 0.86 times more return on investment than Encore Capital. However, NESNVX 1875 14 SEP 31 is 1.17 times less risky than Encore Capital. It trades about -0.06 of its potential returns per unit of risk. Encore Capital Group is currently generating about -0.1 per unit of risk. If you would invest  8,378  in NESNVX 1875 14 SEP 31 on September 26, 2024 and sell it today you would lose (66.00) from holding NESNVX 1875 14 SEP 31 or give up 0.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	52.38%
Values	Daily Returns

NESNVX 1875 14 SEP 31  vs.  Encore Capital Group

NESNVX 1875 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NESNVX 1875 14 SEP 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NESNVX 1875 14 SEP 31 investors.

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 NESNVX and Encore Capital

The main advantage of trading using opposite NESNVX and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NESNVX 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 NESNVX 1875 14 SEP 31 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.