Correlation Between Armada Hflr and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Armada Hflr 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 Armada Hflr and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and Hercules Capital, you can compare the effects of market volatilities on Armada Hflr 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 Armada Hflr with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Hercules Capital.
Diversification Opportunities for Armada Hflr and Hercules Capital
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Armada and Hercules is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Armada Hflr 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 Armada Hflr Pr 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 Armada Hflr i.e., Armada Hflr and Hercules Capital go up and down completely randomly.
Pair Corralation between Armada Hflr and Hercules Capital
Considering the 90-day investment horizon Armada Hflr is expected to generate 3.14 times less return on investment than Hercules Capital. In addition to that, Armada Hflr is 1.01 times more volatile than Hercules Capital. It trades about 0.02 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 1,364 in Hercules Capital on September 26, 2024 and sell it today you would earn a total of 470.00 from holding Hercules Capital or generate 34.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Armada Hflr Pr vs. Hercules Capital
Performance |
| Timeline |
| Armada Hflr Pr |
| Hercules Capital |
Armada Hflr and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armada Hflr and Hercules Capital
The main advantage of trading using opposite Armada Hflr and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr 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.| Armada Hflr vs. Realty Income | Armada Hflr vs. Park Hotels Resorts | Armada Hflr vs. Power REIT | Armada Hflr vs. Urban Edge Properties |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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