Correlation Between Encore Capital and PennyMac Finl
Can any of the company-specific risk be diversified away by investing in both Encore Capital and PennyMac Finl 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 Encore Capital and PennyMac Finl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Encore Capital Group and PennyMac Finl Svcs, you can compare the effects of market volatilities on Encore Capital and PennyMac Finl 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 Encore Capital with a short position of PennyMac Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and PennyMac Finl.
Diversification Opportunities for Encore Capital and PennyMac Finl
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Encore and PennyMac is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and PennyMac Finl Svcs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennyMac Finl Svcs and Encore Capital 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 Encore Capital Group are associated (or correlated) with PennyMac Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennyMac Finl Svcs has no effect on the direction of Encore Capital i.e., Encore Capital and PennyMac Finl go up and down completely randomly.
Pair Corralation between Encore Capital and PennyMac Finl
Given the investment horizon of 90 days Encore Capital Group is expected to under-perform the PennyMac Finl. In addition to that, Encore Capital is 1.43 times more volatile than PennyMac Finl Svcs. It trades about 0.0 of its total potential returns per unit of risk. PennyMac Finl Svcs is currently generating about 0.04 per unit of volatility. If you would invest 6,868 in PennyMac Finl Svcs on March 24, 2025 and sell it today you would earn a total of 2,672 from holding PennyMac Finl Svcs or generate 38.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. PennyMac Finl Svcs
Performance |
| Timeline |
| Encore Capital Group |
| PennyMac Finl Svcs |
Encore Capital and PennyMac Finl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and PennyMac Finl
The main advantage of trading using opposite Encore Capital and PennyMac Finl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, PennyMac Finl 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 PennyMac Finl will offset losses from the drop in PennyMac Finl's long position.| Encore Capital vs. Guild Holdings Co | Encore Capital vs. Mr Cooper Group | Encore Capital vs. CNFinance Holdings | Encore Capital vs. Security National Financial |
| PennyMac Finl vs. Encore Capital Group | PennyMac Finl vs. Greystone Housing Impact | PennyMac Finl vs. Guild Holdings Co | PennyMac Finl 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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