Correlation Between Encore Capital and Empresa Distribuidora
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Empresa Distribuidora 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 Empresa Distribuidora 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 Empresa Distribuidora y, you can compare the effects of market volatilities on Encore Capital and Empresa Distribuidora 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 Empresa Distribuidora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Empresa Distribuidora.
Diversification Opportunities for Encore Capital and Empresa Distribuidora
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Encore and Empresa is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Encore Capital i.e., Encore Capital and Empresa Distribuidora go up and down completely randomly.
Pair Corralation between Encore Capital and Empresa Distribuidora
Given the investment horizon of 90 days Encore Capital is expected to generate 8.71 times less return on investment than Empresa Distribuidora. But when comparing it to its historical volatility, Encore Capital Group is 1.54 times less risky than Empresa Distribuidora. It trades about 0.02 of its potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,811 in Empresa Distribuidora y on September 4, 2024 and sell it today you would earn a total of 2,403 from holding Empresa Distribuidora y or generate 132.69% 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. Empresa Distribuidora y
Performance |
| Timeline |
| Encore Capital Group |
| Empresa Distribuidora |
Encore Capital and Empresa Distribuidora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Empresa Distribuidora
The main advantage of trading using opposite Encore Capital and Empresa Distribuidora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Empresa Distribuidora 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 Empresa Distribuidora will offset losses from the drop in Empresa Distribuidora'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 |
| Empresa Distribuidora vs. Centrais Electricas Brasileiras | Empresa Distribuidora vs. Enel Chile SA | Empresa Distribuidora vs. Korea Electric Power | Empresa Distribuidora vs. Genie Energy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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