Correlation Between Encore Capital and BioNTech
Can any of the company-specific risk be diversified away by investing in both Encore Capital and BioNTech 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 BioNTech 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 BioNTech SE, you can compare the effects of market volatilities on Encore Capital and BioNTech 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 BioNTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and BioNTech.
Diversification Opportunities for Encore Capital and BioNTech
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and BioNTech is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and BioNTech SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioNTech SE 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 BioNTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioNTech SE has no effect on the direction of Encore Capital i.e., Encore Capital and BioNTech go up and down completely randomly.
Pair Corralation between Encore Capital and BioNTech
Given the investment horizon of 90 days Encore Capital is expected to generate 7.68 times less return on investment than BioNTech. But when comparing it to its historical volatility, Encore Capital Group is 1.17 times less risky than BioNTech. It trades about 0.01 of its potential returns per unit of risk. BioNTech SE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 9,850 in BioNTech SE on August 29, 2024 and sell it today you would earn a total of 2,222 from holding BioNTech SE or generate 22.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. BioNTech SE
Performance |
| Timeline |
| Encore Capital Group |
| BioNTech SE |
Encore Capital and BioNTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and BioNTech
The main advantage of trading using opposite Encore Capital and BioNTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, BioNTech 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 BioNTech will offset losses from the drop in BioNTech'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 |
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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