Correlation Between Encore Capital and GAMCO Natural
Can any of the company-specific risk be diversified away by investing in both Encore Capital and GAMCO Natural 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 GAMCO Natural 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 GAMCO Natural Resources, you can compare the effects of market volatilities on Encore Capital and GAMCO Natural 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 GAMCO Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and GAMCO Natural.
Diversification Opportunities for Encore Capital and GAMCO Natural
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and GAMCO is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources 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 GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of Encore Capital i.e., Encore Capital and GAMCO Natural go up and down completely randomly.
Pair Corralation between Encore Capital and GAMCO Natural
Given the investment horizon of 90 days Encore Capital Group is expected to generate 1.76 times more return on investment than GAMCO Natural. However, Encore Capital is 1.76 times more volatile than GAMCO Natural Resources. It trades about 0.2 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about 0.08 per unit of risk. If you would invest 4,568 in Encore Capital Group on September 1, 2024 and sell it today you would earn a total of 351.00 from holding Encore Capital Group or generate 7.68% 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. GAMCO Natural Resources
Performance |
| Timeline |
| Encore Capital Group |
| GAMCO Natural Resources |
Encore Capital and GAMCO Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and GAMCO Natural
The main advantage of trading using opposite Encore Capital and GAMCO Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, GAMCO Natural 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 GAMCO Natural will offset losses from the drop in GAMCO Natural's long position.| Encore Capital vs. 360 Finance | Encore Capital vs. Atlanticus Holdings | Encore Capital vs. Qudian Inc | Encore Capital vs. Enova International |
| GAMCO Natural vs. MFS Investment Grade | GAMCO Natural vs. Invesco High Income | GAMCO Natural vs. Eaton Vance National | GAMCO Natural vs. Federated Premier Municipal |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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