Correlation Between Bain Capital and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Bain Capital 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 Bain Capital and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bain Capital Specialty and Hercules Capital, you can compare the effects of market volatilities on Bain Capital 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 Bain Capital with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bain Capital and Hercules Capital.
Diversification Opportunities for Bain Capital and Hercules Capital
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bain and Hercules is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bain Capital Specialty and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Bain 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 Bain Capital Specialty 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 Bain Capital i.e., Bain Capital and Hercules Capital go up and down completely randomly.
Pair Corralation between Bain Capital and Hercules Capital
Given the investment horizon of 90 days Bain Capital is expected to generate 1.25 times less return on investment than Hercules Capital. But when comparing it to its historical volatility, Bain Capital Specialty is 1.33 times less risky than Hercules Capital. It trades about 0.13 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 967.00 in Hercules Capital on November 1, 2024 and sell it today you would earn a total of 1,139 from holding Hercules Capital or generate 117.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bain Capital Specialty vs. Hercules Capital
Performance |
| Timeline |
| Bain Capital Specialty |
| Hercules Capital |
Bain Capital and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bain Capital and Hercules Capital
The main advantage of trading using opposite Bain Capital and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bain Capital 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.| Bain Capital vs. BlackRock TCP Capital | Bain Capital vs. Triplepoint Venture Growth | Bain Capital vs. Sixth Street Specialty | Bain Capital vs. Golub Capital BDC |
| Hercules Capital vs. Main Street Capital | Hercules Capital vs. PennantPark Floating Rate | Hercules Capital vs. FS KKR Capital | Hercules Capital vs. Prospect Capital |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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