Correlation Between Encore Capital and Velocity Financial
Can any of the company-specific risk be diversified away by investing in both Encore Capital and Velocity Financial 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 Velocity Financial 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 Velocity Financial Llc, you can compare the effects of market volatilities on Encore Capital and Velocity Financial 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 Velocity Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Encore Capital and Velocity Financial.
Diversification Opportunities for Encore Capital and Velocity Financial
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Encore and Velocity is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Encore Capital Group and Velocity Financial Llc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Velocity Financial Llc 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 Velocity Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Velocity Financial Llc has no effect on the direction of Encore Capital i.e., Encore Capital and Velocity Financial go up and down completely randomly.
Pair Corralation between Encore Capital and Velocity Financial
Given the investment horizon of 90 days Encore Capital Group is expected to under-perform the Velocity Financial. In addition to that, Encore Capital is 1.14 times more volatile than Velocity Financial Llc. It trades about 0.0 of its total potential returns per unit of risk. Velocity Financial Llc is currently generating about 0.05 per unit of volatility. If you would invest 1,194 in Velocity Financial Llc on March 26, 2025 and sell it today you would earn a total of 671.00 from holding Velocity Financial Llc or generate 56.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Encore Capital Group vs. Velocity Financial Llc
Performance |
| Timeline |
| Encore Capital Group |
| Velocity Financial Llc |
Encore Capital and Velocity Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Encore Capital and Velocity Financial
The main advantage of trading using opposite Encore Capital and Velocity Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Encore Capital position performs unexpectedly, Velocity Financial 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 Velocity Financial will offset losses from the drop in Velocity Financial'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 |
| Velocity Financial vs. Guild Holdings Co | Velocity Financial vs. Mr Cooper Group | Velocity Financial vs. Encore Capital Group | Velocity Financial vs. CNFinance Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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