Correlation Between Encore Capital and Home Point
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Home Point 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 Home Point 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 Home Point Capital, you can compare the effects of market volatilities on Encore Capital and Home Point 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 Home Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Home Point.
Diversification Opportunities for Encore Capital and Home Point
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and Home is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Home Point Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Point Capital 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 Home Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Point Capital has no effect on the direction of Encore Capital i.e., Encore Capital and Home Point go up and down completely randomly.
Pair Corralation between Encore Capital and Home Point
If you would invest 4,608 in Encore Capital Group on August 27, 2024 and sell it today you would earn a total of 306.00 from holding Encore Capital Group or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Encore Capital Group vs. Home Point Capital
Performance |
| Timeline |
| Encore Capital Group |
| Home Point Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Encore Capital and Home Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Home Point
The main advantage of trading using opposite Encore Capital and Home Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Home Point 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 Home Point will offset losses from the drop in Home Point'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 |
| Home Point vs. CNFinance Holdings | Home Point vs. Security National Financial | Home Point vs. Encore Capital Group | Home Point vs. Guild Holdings Co |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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