Correlation Between Encore Capital and BlackRock TCP
Can any of the company-specific risk be diversified away by investing in both Encore Capital and BlackRock TCP 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 BlackRock TCP 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 BlackRock TCP Capital, you can compare the effects of market volatilities on Encore Capital and BlackRock TCP 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 BlackRock TCP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and BlackRock TCP.
Diversification Opportunities for Encore Capital and BlackRock TCP
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Encore and BlackRock is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and BlackRock TCP Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock TCP Capital 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 BlackRock TCP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock TCP Capital has no effect on the direction of Encore Capital i.e., Encore Capital and BlackRock TCP go up and down completely randomly.
Pair Corralation between Encore Capital and BlackRock TCP
Given the investment horizon of 90 days Encore Capital is expected to generate 1.99 times less return on investment than BlackRock TCP. But when comparing it to its historical volatility, Encore Capital Group is 1.21 times less risky than BlackRock TCP. It trades about 0.09 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 770.00 in BlackRock TCP Capital on November 1, 2024 and sell it today you would earn a total of 143.00 from holding BlackRock TCP Capital or generate 18.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. BlackRock TCP Capital
Performance |
| Timeline |
| Encore Capital Group |
| BlackRock TCP Capital |
Encore Capital and BlackRock TCP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and BlackRock TCP
The main advantage of trading using opposite Encore Capital and BlackRock TCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, BlackRock TCP 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 BlackRock TCP will offset losses from the drop in BlackRock TCP's long position.The idea behind Encore Capital Group and BlackRock TCP Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BlackRock TCP vs. Triplepoint Venture Growth | BlackRock TCP vs. Sixth Street Specialty | BlackRock TCP vs. Golub Capital BDC | BlackRock TCP vs. New Mountain Finance |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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