Correlation Between Encore Capital and Malaga Financial
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Malaga Financial 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 Malaga Financial 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 Malaga Financial, you can compare the effects of market volatilities on Encore Capital and Malaga Financial 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 Malaga Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Malaga Financial.
Diversification Opportunities for Encore Capital and Malaga Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and Malaga is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial 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 Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of Encore Capital i.e., Encore Capital and Malaga Financial go up and down completely randomly.
Pair Corralation between Encore Capital and Malaga Financial
Given the investment horizon of 90 days Encore Capital Group is expected to generate 7.6 times more return on investment than Malaga Financial. However, Encore Capital is 7.6 times more volatile than Malaga Financial. It trades about 0.2 of its potential returns per unit of risk. Malaga Financial is currently generating about -0.19 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. Malaga Financial
Performance |
| Timeline |
| Encore Capital Group |
| Malaga Financial |
Encore Capital and Malaga Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Malaga Financial
The main advantage of trading using opposite Encore Capital and Malaga Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Malaga Financial 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 Malaga Financial will offset losses from the drop in Malaga Financial's long position.| Encore Capital vs. 360 Finance | Encore Capital vs. Atlanticus Holdings | Encore Capital vs. Qudian Inc | Encore Capital vs. Enova International |
| Malaga Financial vs. MF Bancorp | Malaga Financial vs. United Bancorporation of | Malaga Financial vs. Harbor Bankshares | Malaga Financial vs. BankFirst Capital |
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 CEOs Directory module to screen CEOs from public companies around the world.
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