Correlation Between Encore Capital and Mr Cooper
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Mr Cooper 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 Mr Cooper 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 Mr Cooper Group, you can compare the effects of market volatilities on Encore Capital and Mr Cooper 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 Mr Cooper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Mr Cooper.
Diversification Opportunities for Encore Capital and Mr Cooper
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Encore and COOP is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Mr Cooper Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mr Cooper Group 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 Mr Cooper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mr Cooper Group has no effect on the direction of Encore Capital i.e., Encore Capital and Mr Cooper go up and down completely randomly.
Pair Corralation between Encore Capital and Mr Cooper
Given the investment horizon of 90 days Encore Capital is expected to generate 1.52 times less return on investment than Mr Cooper. In addition to that, Encore Capital is 1.04 times more volatile than Mr Cooper Group. It trades about 0.17 of its total potential returns per unit of risk. Mr Cooper Group is currently generating about 0.26 per unit of volatility. If you would invest 9,147 in Mr Cooper Group on August 28, 2024 and sell it today you would earn a total of 919.00 from holding Mr Cooper Group or generate 10.05% 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. Mr Cooper Group
Performance |
| Timeline |
| Encore Capital Group |
| Mr Cooper Group |
Encore Capital and Mr Cooper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Mr Cooper
The main advantage of trading using opposite Encore Capital and Mr Cooper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Mr Cooper 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 Mr Cooper will offset losses from the drop in Mr Cooper'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 |
| Mr Cooper vs. National Bank Holdings | Mr Cooper vs. Community West Bancshares | Mr Cooper vs. Financial Institutions | Mr Cooper vs. Kearny Financial Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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