Correlation Between Microbot Medical and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Microbot Medical 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 Microbot Medical and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microbot Medical and Encore Capital Group, you can compare the effects of market volatilities on Microbot Medical 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 Microbot Medical with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microbot Medical and Encore Capital.
Diversification Opportunities for Microbot Medical and Encore Capital
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microbot and Encore is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microbot Medical 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 Microbot Medical 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 Microbot Medical 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 Microbot Medical i.e., Microbot Medical and Encore Capital go up and down completely randomly.
Pair Corralation between Microbot Medical and Encore Capital
Given the investment horizon of 90 days Microbot Medical is expected to generate 2.5 times less return on investment than Encore Capital. In addition to that, Microbot Medical is 1.47 times more volatile than Encore Capital Group. It trades about 0.05 of its total potential returns per unit of risk. Encore Capital Group is currently generating about 0.17 per unit of volatility. If you would invest 4,591 in Encore Capital Group on August 25, 2024 and sell it today you would earn a total of 323.00 from holding Encore Capital Group or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microbot Medical vs. Encore Capital Group
Performance |
| Timeline |
| Microbot Medical |
| Encore Capital Group |
Microbot Medical and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microbot Medical and Encore Capital
The main advantage of trading using opposite Microbot Medical and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microbot Medical 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.| Microbot Medical vs. Intuitive Surgical | Microbot Medical vs. Innerscope Advertising Agency | Microbot Medical vs. Predictive Oncology | Microbot Medical vs. STAAR Surgical |
| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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