Correlation Between Encore Capital and BCB Bancorp
Can any of the company-specific risk be diversified away by investing in both Encore Capital and BCB Bancorp 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 BCB Bancorp 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 BCB Bancorp, you can compare the effects of market volatilities on Encore Capital and BCB Bancorp 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 BCB Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and BCB Bancorp.
Diversification Opportunities for Encore Capital and BCB Bancorp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Encore and BCB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and BCB Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCB Bancorp 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 BCB Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCB Bancorp has no effect on the direction of Encore Capital i.e., Encore Capital and BCB Bancorp go up and down completely randomly.
Pair Corralation between Encore Capital and BCB Bancorp
Given the investment horizon of 90 days Encore Capital is expected to generate 5.13 times less return on investment than BCB Bancorp. But when comparing it to its historical volatility, Encore Capital Group is 1.09 times less risky than BCB Bancorp. It trades about 0.02 of its potential returns per unit of risk. BCB Bancorp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,005 in BCB Bancorp on August 27, 2024 and sell it today you would earn a total of 345.00 from holding BCB Bancorp or generate 34.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. BCB Bancorp
Performance |
| Timeline |
| Encore Capital Group |
| BCB Bancorp |
Encore Capital and BCB Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and BCB Bancorp
The main advantage of trading using opposite Encore Capital and BCB Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, BCB Bancorp 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 BCB Bancorp will offset losses from the drop in BCB Bancorp's 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 |
| BCB Bancorp vs. Provident Financial Services | BCB Bancorp vs. First Mid Illinois | BCB Bancorp vs. ConnectOne Bancorp | BCB Bancorp vs. Finward Bancorp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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