Correlation Between Boston Omaha and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Boston Omaha 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 Boston Omaha and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Boston Omaha Corp and Encore Capital Group, you can compare the effects of market volatilities on Boston Omaha 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 Boston Omaha with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Omaha and Encore Capital.
Diversification Opportunities for Boston Omaha and Encore Capital
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Boston and Encore is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Boston Omaha Corp 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 Boston Omaha 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 Boston Omaha Corp 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 Boston Omaha i.e., Boston Omaha and Encore Capital go up and down completely randomly.
Pair Corralation between Boston Omaha and Encore Capital
Considering the 90-day investment horizon Boston Omaha Corp is expected to under-perform the Encore Capital. In addition to that, Boston Omaha is 1.02 times more volatile than Encore Capital Group. It trades about -0.08 of its total potential returns per unit of risk. Encore Capital Group is currently generating about 0.17 per unit of volatility. If you would invest 4,608 in Encore Capital Group on August 27, 2024 and sell it today you would earn a total of 306.00 from holding Encore Capital Group or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Boston Omaha Corp vs. Encore Capital Group
Performance |
| Timeline |
| Boston Omaha Corp |
| Encore Capital Group |
Boston Omaha and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Omaha and Encore Capital
The main advantage of trading using opposite Boston Omaha and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Omaha 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.| Boston Omaha vs. Integral Ad Science | Boston Omaha vs. Cardlytics | Boston Omaha vs. Cimpress NV | Boston Omaha vs. QuinStreet |
| Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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