Correlation Between Israel Acquisitions and Encore Capital

Can any of the company-specific risk be diversified away by investing in both Israel Acquisitions 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 Israel Acquisitions and Encore Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Israel Acquisitions Corp and Encore Capital Group, you can compare the effects of market volatilities on Israel Acquisitions 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 Israel Acquisitions with a short position of Encore Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Israel Acquisitions and Encore Capital.

Diversification Opportunities for Israel Acquisitions and Encore Capital

0.33

Correlation Coefficient

Israel Acquisitions  Encore Capital

Weak diversification

The 3 months correlation between Israel and Encore is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Israel Acquisitions Corp 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 Israel Acquisitions 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 Israel Acquisitions Corp 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 Israel Acquisitions i.e., Israel Acquisitions and Encore Capital go up and down completely randomly.

Pair Corralation between Israel Acquisitions and Encore Capital

Assuming the 90 days horizon Israel Acquisitions Corp is expected to generate 1.29 times more return on investment than Encore Capital. However, Israel Acquisitions is 1.29 times more volatile than Encore Capital Group. It trades about 0.09 of its potential returns per unit of risk. Encore Capital Group is currently generating about 0.02 per unit of risk. If you would invest  1,113  in Israel Acquisitions Corp on September 5, 2024 and sell it today you would earn a total of  126.00  from holding Israel Acquisitions Corp or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Israel Acquisitions Corp  vs.  Encore Capital Group

Israel Acquisitions Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Israel Acquisitions Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, Israel Acquisitions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Encore Capital Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Encore Capital Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Encore Capital is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Israel Acquisitions and Encore Capital

The main advantage of trading using opposite Israel Acquisitions and Encore Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Israel Acquisitions 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.

The idea behind Israel Acquisitions Corp and Encore Capital Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.