Correlation Between Encore Capital and Ameriprise Financial

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Can any of the company-specific risk be diversified away by investing in both Encore Capital and Ameriprise Financial 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 Ameriprise Financial 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 Ameriprise Financial, you can compare the effects of market volatilities on Encore Capital and Ameriprise Financial 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 Ameriprise Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Ameriprise Financial.

Diversification Opportunities for Encore Capital and Ameriprise Financial

EncoreAmeripriseDiversified AwayEncoreAmeripriseDiversified Away100%
0.48
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Encore and Ameriprise is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Ameriprise Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameriprise Financial 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 Ameriprise Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameriprise Financial has no effect on the direction of Encore Capital i.e., Encore Capital and Ameriprise Financial go up and down completely randomly.

Pair Corralation between Encore Capital and Ameriprise Financial

Given the investment horizon of 90 days Encore Capital is expected to generate 6.86 times less return on investment than Ameriprise Financial. In addition to that, Encore Capital is 1.45 times more volatile than Ameriprise Financial. It trades about 0.01 of its total potential returns per unit of risk. Ameriprise Financial is currently generating about 0.07 per unit of volatility. If you would invest  33,304  in Ameriprise Financial on November 19, 2024 and sell it today you would earn a total of  21,289  from holding Ameriprise Financial or generate 63.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Encore Capital Group  vs.  Ameriprise Financial

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-505
JavaScript chart by amCharts 3.21.15ECPG AMP
       Timeline  
Encore Capital Group 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Encore Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb45464748495051
Ameriprise Financial 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Ameriprise Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Ameriprise Financial is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb510520530540550560570580

Encore Capital and Ameriprise Financial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.32-3.24-2.15-1.070.011.092.183.274.35 0.050.100.150.200.25
JavaScript chart by amCharts 3.21.15ECPG AMP
       Returns  

Pair Trading with Encore Capital and Ameriprise Financial

The main advantage of trading using opposite Encore Capital and Ameriprise Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Ameriprise Financial 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 Ameriprise Financial will offset losses from the drop in Ameriprise Financial's long position.
The idea behind Encore Capital Group and Ameriprise Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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