Correlation Between Encore Capital and Metalink
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Metalink 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 Metalink 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 Metalink, you can compare the effects of market volatilities on Encore Capital and Metalink 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 Metalink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Metalink.
Diversification Opportunities for Encore Capital and Metalink
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Encore and Metalink is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Metalink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metalink 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 Metalink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metalink has no effect on the direction of Encore Capital i.e., Encore Capital and Metalink go up and down completely randomly.
Pair Corralation between Encore Capital and Metalink
Given the investment horizon of 90 days Encore Capital is expected to generate 71.3 times less return on investment than Metalink. But when comparing it to its historical volatility, Encore Capital Group is 28.15 times less risky than Metalink. It trades about 0.02 of its potential returns per unit of risk. Metalink is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 59.00 in Metalink on September 2, 2024 and sell it today you would lose (16.00) from holding Metalink or give up 27.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. Metalink
Performance |
| Timeline |
| Encore Capital Group |
| Metalink |
Encore Capital and Metalink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Metalink
The main advantage of trading using opposite Encore Capital and Metalink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Metalink 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 Metalink will offset losses from the drop in Metalink'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 |
| Metalink vs. Eastern Co | Metalink vs. Commonwealth Bank of | Metalink vs. Merit Medical Systems | Metalink vs. Encore Capital Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |