Correlation Between Yirendai and Encore Capital
Can any of the company-specific risk be diversified away by investing in both Yirendai 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 Yirendai and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yirendai and Encore Capital Group, you can compare the effects of market volatilities on Yirendai 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 Yirendai with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yirendai and Encore Capital.
Diversification Opportunities for Yirendai and Encore Capital
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yirendai and Encore is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai 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 Yirendai 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 Yirendai 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 Yirendai i.e., Yirendai and Encore Capital go up and down completely randomly.
Pair Corralation between Yirendai and Encore Capital
Considering the 90-day investment horizon Yirendai is expected to under-perform the Encore Capital. In addition to that, Yirendai is 3.35 times more volatile than Encore Capital Group. It trades about -0.03 of its total potential returns per unit of risk. Encore Capital Group is currently generating about 0.19 per unit of volatility. If you would invest 4,584 in Encore Capital Group on August 30, 2024 and sell it today you would earn a total of 354.00 from holding Encore Capital Group or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yirendai vs. Encore Capital Group
Performance |
| Timeline |
| Yirendai |
| Encore Capital Group |
Yirendai and Encore Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yirendai and Encore Capital
The main advantage of trading using opposite Yirendai and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yirendai 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.| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
| Encore Capital vs. 360 Finance | Encore Capital vs. Atlanticus Holdings | Encore Capital vs. X Financial Class | Encore Capital vs. Yirendai |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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