Correlation Between FirstCash and Encore Capital
Can any of the company-specific risk be diversified away by investing in both FirstCash 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 FirstCash and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and Encore Capital Group, you can compare the effects of market volatilities on FirstCash 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 FirstCash with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Encore Capital.
Diversification Opportunities for FirstCash and Encore Capital
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FirstCash and Encore is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash 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 FirstCash 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 FirstCash 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 FirstCash i.e., FirstCash and Encore Capital go up and down completely randomly.
Pair Corralation between FirstCash and Encore Capital
Given the investment horizon of 90 days FirstCash is expected to generate 0.74 times more return on investment than Encore Capital. However, FirstCash is 1.36 times less risky than Encore Capital. It trades about 0.03 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.01 per unit of risk. If you would invest 8,919 in FirstCash on August 24, 2024 and sell it today you would earn a total of 1,378 from holding FirstCash or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstCash vs. Encore Capital Group
Performance |
| Timeline |
| FirstCash |
| Encore Capital Group |
FirstCash and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstCash and Encore Capital
The main advantage of trading using opposite FirstCash and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash 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.| FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial Corp |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |