Correlation Between Mr Cooper and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Mr Cooper 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 Mr Cooper and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mr Cooper Group and Encore Capital Group, you can compare the effects of market volatilities on Mr Cooper 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 Mr Cooper with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mr Cooper and Encore Capital.
Diversification Opportunities for Mr Cooper and Encore Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COOP and Encore is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mr Cooper Group 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 Mr Cooper 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 Mr Cooper Group 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 Mr Cooper i.e., Mr Cooper and Encore Capital go up and down completely randomly.
Pair Corralation between Mr Cooper and Encore Capital
Given the investment horizon of 90 days Mr Cooper Group is expected to generate 1.04 times more return on investment than Encore Capital. However, Mr Cooper is 1.04 times more volatile than Encore Capital Group. It trades about 0.1 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.02 per unit of risk. If you would invest 9,163 in Mr Cooper Group on November 2, 2024 and sell it today you would earn a total of 1,542 from holding Mr Cooper Group or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.04% |
| Values | Daily Returns |
Mr Cooper Group vs. Encore Capital Group
Performance |
| Timeline |
| Mr Cooper Group |
| Encore Capital Group |
Mr Cooper and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mr Cooper and Encore Capital
The main advantage of trading using opposite Mr Cooper and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mr Cooper 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.| Mr Cooper vs. Guild Holdings Co | Mr Cooper vs. Security National Financial | Mr Cooper vs. Encore Capital Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |