Correlation Between Paragon Banking and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Paragon Banking and Hercules 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 Paragon Banking and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paragon Banking Group and Hercules Capital, you can compare the effects of market volatilities on Paragon Banking and Hercules 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 Paragon Banking with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon Banking and Hercules Capital.
Diversification Opportunities for Paragon Banking and Hercules Capital
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Paragon and Hercules is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Paragon Banking Group and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Paragon Banking 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 Paragon Banking Group are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of Paragon Banking i.e., Paragon Banking and Hercules Capital go up and down completely randomly.
Pair Corralation between Paragon Banking and Hercules Capital
Assuming the 90 days trading horizon Paragon Banking is expected to generate 1.39 times less return on investment than Hercules Capital. In addition to that, Paragon Banking is 1.06 times more volatile than Hercules Capital. It trades about 0.05 of its total potential returns per unit of risk. Hercules Capital is currently generating about 0.07 per unit of volatility. If you would invest 1,025 in Hercules Capital on September 25, 2024 and sell it today you would earn a total of 809.00 from holding Hercules Capital or generate 78.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Paragon Banking Group vs. Hercules Capital
Performance |
| Timeline |
| Paragon Banking Group |
| Hercules Capital |
Paragon Banking and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paragon Banking and Hercules Capital
The main advantage of trading using opposite Paragon Banking and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon Banking position performs unexpectedly, Hercules 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.| Paragon Banking vs. Walker Dunlop | Paragon Banking vs. Hercules Capital | Paragon Banking vs. DIVERSIFIED ROYALTY | Paragon Banking vs. Federal Home Loan |
| Hercules Capital vs. HEMISPHERE EGY | Hercules Capital vs. Spirent Communications plc | Hercules Capital vs. Sixt Leasing SE | Hercules Capital vs. United Internet AG |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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