Correlation Between MidCap Financial and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both MidCap Financial 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 MidCap Financial and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MidCap Financial Investment and Hercules Capital, you can compare the effects of market volatilities on MidCap Financial 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 MidCap Financial with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and Hercules Capital.
Diversification Opportunities for MidCap Financial and Hercules Capital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MidCap and Hercules is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and MidCap Financial 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 MidCap Financial Investment 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 MidCap Financial i.e., MidCap Financial and Hercules Capital go up and down completely randomly.
Pair Corralation between MidCap Financial and Hercules Capital
Assuming the 90 days trading horizon MidCap Financial is expected to generate 7.66 times less return on investment than Hercules Capital. But when comparing it to its historical volatility, MidCap Financial Investment is 1.5 times less risky than Hercules Capital. It trades about 0.04 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,802 in Hercules Capital on October 28, 2024 and sell it today you would earn a total of 200.00 from holding Hercules Capital or generate 11.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MidCap Financial Investment vs. Hercules Capital
Performance |
| Timeline |
| MidCap Financial Inv |
| Hercules Capital |
MidCap Financial and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MidCap Financial and Hercules Capital
The main advantage of trading using opposite MidCap Financial and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial 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.| MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc | MidCap Financial vs. Apple Inc |
| Hercules Capital vs. Corsair Gaming | Hercules Capital vs. Delta Air Lines | Hercules Capital vs. American Airlines Group | Hercules Capital vs. Ryanair Holdings plc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |