Correlation Between Hercules Capital and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Dow Jones 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 Hercules Capital and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and Dow Jones Industrial, you can compare the effects of market volatilities on Hercules Capital and Dow Jones 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 Hercules Capital with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Dow Jones.
Diversification Opportunities for Hercules Capital and Dow Jones
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hercules and Dow is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Hercules 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 Hercules Capital are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Hercules Capital i.e., Hercules Capital and Dow Jones go up and down completely randomly.
Pair Corralation between Hercules Capital and Dow Jones
Assuming the 90 days horizon Hercules Capital is expected to generate 2.54 times more return on investment than Dow Jones. However, Hercules Capital is 2.54 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 1,053 in Hercules Capital on September 26, 2024 and sell it today you would earn a total of 781.00 from holding Hercules Capital or generate 74.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.22% |
| Values | Daily Returns |
Hercules Capital vs. Dow Jones Industrial
Performance |
| Timeline |
Hercules Capital and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Hercules Capital
Pair trading matchups for Hercules Capital
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Hercules Capital and Dow Jones
The main advantage of trading using opposite Hercules Capital and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Hercules Capital vs. Harmony Gold Mining | Hercules Capital vs. Evolution Mining Limited | Hercules Capital vs. ORMAT TECHNOLOGIES | Hercules Capital vs. GRIFFIN MINING LTD |
| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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