Correlation Between Acco Brands and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Acco Brands 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 Acco Brands and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acco Brands and Encore Capital Group, you can compare the effects of market volatilities on Acco Brands 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 Acco Brands with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Encore Capital.
Diversification Opportunities for Acco Brands and Encore Capital
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Acco and Encore is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands 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 Acco Brands 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 Acco Brands 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 Acco Brands i.e., Acco Brands and Encore Capital go up and down completely randomly.
Pair Corralation between Acco Brands and Encore Capital
Given the investment horizon of 90 days Acco Brands is expected to generate 1.06 times more return on investment than Encore Capital. However, Acco Brands is 1.06 times more volatile than Encore Capital Group. It trades about 0.02 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.01 per unit of risk. If you would invest 506.00 in Acco Brands on November 19, 2024 and sell it today you would earn a total of 31.00 from holding Acco Brands or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Acco Brands vs. Encore Capital Group
Performance |
| Timeline |
| Acco Brands |
| Encore Capital Group |
Acco Brands and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Acco Brands and Encore Capital
The main advantage of trading using opposite Acco Brands and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands 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.| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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