Correlation Between Encore Capital and CaliberCos
Can any of the company-specific risk be diversified away by investing in both Encore Capital and CaliberCos 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 CaliberCos 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 CaliberCos Class A, you can compare the effects of market volatilities on Encore Capital and CaliberCos 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 CaliberCos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and CaliberCos.
Diversification Opportunities for Encore Capital and CaliberCos
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Encore and CaliberCos is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and CaliberCos Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CaliberCos Class A 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 CaliberCos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CaliberCos Class A has no effect on the direction of Encore Capital i.e., Encore Capital and CaliberCos go up and down completely randomly.
Pair Corralation between Encore Capital and CaliberCos
Given the investment horizon of 90 days Encore Capital Group is expected to generate 0.28 times more return on investment than CaliberCos. However, Encore Capital Group is 3.56 times less risky than CaliberCos. It trades about 0.2 of its potential returns per unit of risk. CaliberCos Class A is currently generating about -0.14 per unit of risk. If you would invest 4,700 in Encore Capital Group on November 2, 2024 and sell it today you would earn a total of 270.00 from holding Encore Capital Group or generate 5.74% 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. CaliberCos Class A
Performance |
| Timeline |
| Encore Capital Group |
| CaliberCos Class A |
Encore Capital and CaliberCos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and CaliberCos
The main advantage of trading using opposite Encore Capital and CaliberCos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, CaliberCos 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 CaliberCos will offset losses from the drop in CaliberCos' long position.The idea behind Encore Capital Group and CaliberCos Class A 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.| CaliberCos vs. Arhaus Inc | CaliberCos vs. Asbury Automotive Group | CaliberCos vs. Playtika Holding Corp | CaliberCos vs. Weyco Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |