Correlation Between Empresa Distribuidora and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Empresa Distribuidora and Encore Capital 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 Empresa Distribuidora and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empresa Distribuidora y and Encore Capital Group, you can compare the effects of market volatilities on Empresa Distribuidora and Encore Capital 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 Empresa Distribuidora with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empresa Distribuidora and Encore Capital.
Diversification Opportunities for Empresa Distribuidora and Encore Capital
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empresa and Encore is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Empresa Distribuidora y and Encore Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Encore Capital Group and Empresa Distribuidora 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 Empresa Distribuidora y are associated (or correlated) with Encore Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Encore Capital Group has no effect on the direction of Empresa Distribuidora i.e., Empresa Distribuidora and Encore Capital go up and down completely randomly.
Pair Corralation between Empresa Distribuidora and Encore Capital
Considering the 90-day investment horizon Empresa Distribuidora y is expected to generate 1.72 times more return on investment than Encore Capital. However, Empresa Distribuidora is 1.72 times more volatile than Encore Capital Group. It trades about 0.1 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.0 per unit of risk. If you would invest 1,637 in Empresa Distribuidora y on September 12, 2024 and sell it today you would earn a total of 2,940 from holding Empresa Distribuidora y or generate 179.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empresa Distribuidora y vs. Encore Capital Group
Performance |
| Timeline |
| Empresa Distribuidora |
| Encore Capital Group |
Empresa Distribuidora and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empresa Distribuidora and Encore Capital
The main advantage of trading using opposite Empresa Distribuidora and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empresa Distribuidora position performs unexpectedly, Encore Capital 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 Encore Capital will offset losses from the drop in Encore Capital's long position.| Empresa Distribuidora vs. Southern Company | Empresa Distribuidora vs. Consolidated Edison | Empresa Distribuidora vs. Edison International |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |