Correlation Between Encore Capital and Guild Holdings
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Guild Holdings 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 Guild Holdings 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 Guild Holdings Co, you can compare the effects of market volatilities on Encore Capital and Guild Holdings 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 Guild Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Guild Holdings.
Diversification Opportunities for Encore Capital and Guild Holdings
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Encore and Guild is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Guild Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guild Holdings 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 Guild Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guild Holdings has no effect on the direction of Encore Capital i.e., Encore Capital and Guild Holdings go up and down completely randomly.
Pair Corralation between Encore Capital and Guild Holdings
Given the investment horizon of 90 days Encore Capital Group is expected to under-perform the Guild Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Encore Capital Group is 1.31 times less risky than Guild Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Guild Holdings Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,112 in Guild Holdings Co on August 27, 2024 and sell it today you would earn a total of 253.00 from holding Guild Holdings Co or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. Guild Holdings Co
Performance |
| Timeline |
| Encore Capital Group |
| Guild Holdings |
Encore Capital and Guild Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Guild Holdings
The main advantage of trading using opposite Encore Capital and Guild Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Guild Holdings 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 Guild Holdings will offset losses from the drop in Guild Holdings' 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 |
| Guild Holdings vs. Mr Cooper Group | Guild Holdings vs. Encore Capital Group | Guild Holdings vs. CNFinance Holdings | Guild Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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