Correlation Between Encore Capital and Pearl Holdings
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Pearl Holdings 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 Pearl Holdings 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 Pearl Holdings Acquisition, you can compare the effects of market volatilities on Encore Capital and Pearl Holdings 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 Pearl Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Pearl Holdings.
Diversification Opportunities for Encore Capital and Pearl Holdings
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Encore and Pearl is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Pearl Holdings Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearl Holdings Acqui 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 Pearl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearl Holdings Acqui has no effect on the direction of Encore Capital i.e., Encore Capital and Pearl Holdings go up and down completely randomly.
Pair Corralation between Encore Capital and Pearl Holdings
Given the investment horizon of 90 days Encore Capital Group is expected to under-perform the Pearl Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Encore Capital Group is 39.16 times less risky than Pearl Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Pearl Holdings Acquisition is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2.13 in Pearl Holdings Acquisition on October 7, 2024 and sell it today you would lose (0.12) from holding Pearl Holdings Acquisition or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 25.0% |
| Values | Daily Returns |
Encore Capital Group vs. Pearl Holdings Acquisition
Performance |
| Timeline |
| Encore Capital Group |
| Pearl Holdings Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Encore Capital and Pearl Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Pearl Holdings
The main advantage of trading using opposite Encore Capital and Pearl Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Pearl Holdings 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 Pearl Holdings will offset losses from the drop in Pearl Holdings' 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 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |