Correlation Between Encore Capital and Mid Atlantic
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Mid Atlantic 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 Mid Atlantic 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 Mid Atlantic Home Health, you can compare the effects of market volatilities on Encore Capital and Mid Atlantic 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 Mid Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Mid Atlantic.
Diversification Opportunities for Encore Capital and Mid Atlantic
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Encore and Mid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Mid Atlantic Home Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Atlantic Home 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 Mid Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Atlantic Home has no effect on the direction of Encore Capital i.e., Encore Capital and Mid Atlantic go up and down completely randomly.
Pair Corralation between Encore Capital and Mid Atlantic
Given the investment horizon of 90 days Encore Capital Group is expected to generate 0.85 times more return on investment than Mid Atlantic. However, Encore Capital Group is 1.17 times less risky than Mid Atlantic. It trades about 0.01 of its potential returns per unit of risk. Mid Atlantic Home Health is currently generating about -0.05 per unit of risk. If you would invest 5,076 in Encore Capital Group on September 12, 2024 and sell it today you would lose (195.00) from holding Encore Capital Group or give up 3.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Encore Capital Group vs. Mid Atlantic Home Health
Performance |
| Timeline |
| Encore Capital Group |
| Mid Atlantic Home |
Encore Capital and Mid Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Mid Atlantic
The main advantage of trading using opposite Encore Capital and Mid Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Mid Atlantic 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 Mid Atlantic will offset losses from the drop in Mid Atlantic'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 |
| Mid Atlantic vs. Pennant Group | Mid Atlantic vs. Encompass Health Corp | Mid Atlantic vs. Enhabit | Mid Atlantic vs. Concord Medical Services |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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