Correlation Between Encore Capital and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Anheuser Busch 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 Anheuser Busch 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 Anheuser Busch Inbev, you can compare the effects of market volatilities on Encore Capital and Anheuser Busch 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 Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Anheuser Busch.
Diversification Opportunities for Encore Capital and Anheuser Busch
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Encore and Anheuser is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev 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 Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of Encore Capital i.e., Encore Capital and Anheuser Busch go up and down completely randomly.
Pair Corralation between Encore Capital and Anheuser Busch
Given the investment horizon of 90 days Encore Capital Group is expected to generate 1.69 times more return on investment than Anheuser Busch. However, Encore Capital is 1.69 times more volatile than Anheuser Busch Inbev. It trades about 0.05 of its potential returns per unit of risk. Anheuser Busch Inbev is currently generating about -0.05 per unit of risk. If you would invest 4,332 in Encore Capital Group on September 3, 2024 and sell it today you would earn a total of 587.00 from holding Encore Capital Group or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. Anheuser Busch Inbev
Performance |
| Timeline |
| Encore Capital Group |
| Anheuser Busch Inbev |
Encore Capital and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Anheuser Busch
The main advantage of trading using opposite Encore Capital and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Anheuser Busch 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 Anheuser Busch will offset losses from the drop in Anheuser Busch'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 |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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