Correlation Between Encore Capital and MCAN Mortgage
Can any of the company-specific risk be diversified away by investing in both Encore Capital and MCAN Mortgage 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 MCAN Mortgage 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 MCAN Mortgage, you can compare the effects of market volatilities on Encore Capital and MCAN Mortgage 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 MCAN Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and MCAN Mortgage.
Diversification Opportunities for Encore Capital and MCAN Mortgage
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Encore and MCAN is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage 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 MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Encore Capital i.e., Encore Capital and MCAN Mortgage go up and down completely randomly.
Pair Corralation between Encore Capital and MCAN Mortgage
Given the investment horizon of 90 days Encore Capital Group is expected to generate 1.22 times more return on investment than MCAN Mortgage. However, Encore Capital is 1.22 times more volatile than MCAN Mortgage. It trades about 0.23 of its potential returns per unit of risk. MCAN Mortgage is currently generating about 0.1 per unit of risk. If you would invest 4,534 in Encore Capital Group on September 4, 2024 and sell it today you would earn a total of 390.00 from holding Encore Capital Group or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Encore Capital Group vs. MCAN Mortgage
Performance |
| Timeline |
| Encore Capital Group |
| MCAN Mortgage |
Encore Capital and MCAN Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and MCAN Mortgage
The main advantage of trading using opposite Encore Capital and MCAN Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, MCAN Mortgage 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 MCAN Mortgage will offset losses from the drop in MCAN Mortgage'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 |
| MCAN Mortgage vs. Western Asset Global | MCAN Mortgage vs. Invesco Trust For | MCAN Mortgage vs. Logan Ridge Finance | MCAN Mortgage vs. Invesco Advantage MIT |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |