Correlation Between Encore Capital and HNI Corp
Can any of the company-specific risk be diversified away by investing in both Encore Capital and HNI Corp 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 HNI Corp 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 HNI Corp, you can compare the effects of market volatilities on Encore Capital and HNI Corp 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 HNI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and HNI Corp.
Diversification Opportunities for Encore Capital and HNI Corp
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Encore and HNI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and HNI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HNI Corp 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 HNI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HNI Corp has no effect on the direction of Encore Capital i.e., Encore Capital and HNI Corp go up and down completely randomly.
Pair Corralation between Encore Capital and HNI Corp
Given the investment horizon of 90 days Encore Capital is expected to generate 1.56 times less return on investment than HNI Corp. But when comparing it to its historical volatility, Encore Capital Group is 1.04 times less risky than HNI Corp. It trades about 0.16 of its potential returns per unit of risk. HNI Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 5,152 in HNI Corp on August 28, 2024 and sell it today you would earn a total of 537.00 from holding HNI Corp or generate 10.42% 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. HNI Corp
Performance |
| Timeline |
| Encore Capital Group |
| HNI Corp |
Encore Capital and HNI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and HNI Corp
The main advantage of trading using opposite Encore Capital and HNI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, HNI Corp 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 HNI Corp will offset losses from the drop in HNI Corp'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 |
| HNI Corp vs. Park Electrochemical | HNI Corp vs. Innovative Solutions and | HNI Corp vs. Curtiss Wright | HNI Corp vs. National Presto Industries |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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