Correlation Between Encore Capital and Acco Brands
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Acco Brands 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 Encore Capital and Acco Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Capital Group and Acco Brands, you can compare the effects of market volatilities on Encore Capital and Acco Brands 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 Encore Capital with a short position of Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Acco Brands.
Diversification Opportunities for Encore Capital and Acco Brands
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Encore and Acco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands and Encore Capital 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 Encore Capital Group are associated (or correlated) with Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Encore Capital i.e., Encore Capital and Acco Brands go up and down completely randomly.
Pair Corralation between Encore Capital and Acco Brands
Given the investment horizon of 90 days Encore Capital is expected to generate 2.78 times less return on investment than Acco Brands. But when comparing it to its historical volatility, Encore Capital Group is 1.51 times less risky than Acco Brands. It trades about 0.17 of its potential returns per unit of risk. Acco Brands is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 481.00 in Acco Brands on August 25, 2024 and sell it today you would earn a total of 101.00 from holding Acco Brands or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. Acco Brands
Performance |
| Timeline |
| Encore Capital Group |
| Acco Brands |
Encore Capital and Acco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Acco Brands
The main advantage of trading using opposite Encore Capital and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.| Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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