Correlation Between PennantPark Floating and Encore Capital
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating 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 PennantPark Floating and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Floating Rate and Encore Capital Group, you can compare the effects of market volatilities on PennantPark Floating 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 PennantPark Floating with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Encore Capital.
Diversification Opportunities for PennantPark Floating and Encore Capital
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PennantPark and Encore is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate 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 PennantPark Floating 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 PennantPark Floating Rate 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 PennantPark Floating i.e., PennantPark Floating and Encore Capital go up and down completely randomly.
Pair Corralation between PennantPark Floating and Encore Capital
Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the Encore Capital. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Floating Rate is 2.34 times less risky than Encore Capital. The stock trades about -0.14 of its potential returns per unit of risk. The Encore Capital Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,514 in Encore Capital Group on August 26, 2024 and sell it today you would earn a total of 400.00 from holding Encore Capital Group or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Encore Capital Group
Performance |
| Timeline |
| PennantPark Floating Rate |
| Encore Capital Group |
PennantPark Floating and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Encore Capital
The main advantage of trading using opposite PennantPark Floating and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating 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.| PennantPark Floating vs. PowerUp Acquisition Corp | PennantPark Floating vs. Aurora Innovation | PennantPark Floating vs. HUMANA INC | PennantPark Floating vs. Aquagold 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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