Correlation Between BOS Better and Encore Capital
Can any of the company-specific risk be diversified away by investing in both BOS Better 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 BOS Better and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BOS Better Online and Encore Capital Group, you can compare the effects of market volatilities on BOS Better 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 BOS Better with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and Encore Capital.
Diversification Opportunities for BOS Better and Encore Capital
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BOS and Encore is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online 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 BOS Better 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 BOS Better Online 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 BOS Better i.e., BOS Better and Encore Capital go up and down completely randomly.
Pair Corralation between BOS Better and Encore Capital
Given the investment horizon of 90 days BOS Better Online is expected to generate 0.78 times more return on investment than Encore Capital. However, BOS Better Online is 1.28 times less risky than Encore Capital. It trades about 0.43 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.19 per unit of risk. If you would invest 295.00 in BOS Better Online on August 30, 2024 and sell it today you would earn a total of 43.00 from holding BOS Better Online or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BOS Better Online vs. Encore Capital Group
Performance |
| Timeline |
| BOS Better Online |
| Encore Capital Group |
BOS Better and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BOS Better and Encore Capital
The main advantage of trading using opposite BOS Better and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOS Better 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.| BOS Better vs. Knowles Cor | BOS Better vs. AudioCodes | BOS Better vs. Ituran Location and | BOS Better vs. Aviat Networks |
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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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