Correlation Between Franklin Street and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Franklin Street 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 Franklin Street and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Street Properties and Encore Capital Group, you can compare the effects of market volatilities on Franklin Street 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 Franklin Street with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Street and Encore Capital.
Diversification Opportunities for Franklin Street and Encore Capital
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Encore is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Street Properties 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 Franklin Street 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 Franklin Street Properties 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 Franklin Street i.e., Franklin Street and Encore Capital go up and down completely randomly.
Pair Corralation between Franklin Street and Encore Capital
Considering the 90-day investment horizon Franklin Street Properties is expected to generate 1.97 times more return on investment than Encore Capital. However, Franklin Street is 1.97 times more volatile than Encore Capital Group. It trades about 0.14 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.13 per unit of risk. If you would invest 176.00 in Franklin Street Properties on August 24, 2024 and sell it today you would earn a total of 19.00 from holding Franklin Street Properties or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Street Properties vs. Encore Capital Group
Performance |
| Timeline |
| Franklin Street Prop |
| Encore Capital Group |
Franklin Street and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Street and Encore Capital
The main advantage of trading using opposite Franklin Street and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Street 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.| Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Highwoods Properties | Franklin Street vs. Douglas Emmett | Franklin Street vs. Equity Commonwealth |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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