Correlation Between Suburban Propane and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Suburban Propane 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 Suburban Propane and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suburban Propane Partners and Encore Capital Group, you can compare the effects of market volatilities on Suburban Propane 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 Suburban Propane with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suburban Propane and Encore Capital.
Diversification Opportunities for Suburban Propane and Encore Capital
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Suburban and Encore is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Suburban Propane Partners 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 Suburban Propane 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 Suburban Propane Partners 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 Suburban Propane i.e., Suburban Propane and Encore Capital go up and down completely randomly.
Pair Corralation between Suburban Propane and Encore Capital
Considering the 90-day investment horizon Suburban Propane Partners is expected to generate 0.86 times more return on investment than Encore Capital. However, Suburban Propane Partners is 1.17 times less risky than Encore Capital. It trades about 0.06 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 1,349 in Suburban Propane Partners on September 12, 2024 and sell it today you would earn a total of 535.00 from holding Suburban Propane Partners or generate 39.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suburban Propane Partners vs. Encore Capital Group
Performance |
| Timeline |
| Suburban Propane Partners |
| Encore Capital Group |
Suburban Propane and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suburban Propane and Encore Capital
The main advantage of trading using opposite Suburban Propane and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suburban Propane 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.| Suburban Propane vs. Northwest Natural Gas | Suburban Propane vs. NewJersey Resources | Suburban Propane vs. Atmos Energy | Suburban Propane vs. Chesapeake Utilities |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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