Correlation Between Golub Capital and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Golub 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 Golub 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 Golub Capital BDC and Hercules Capital, you can compare the effects of market volatilities on Golub 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 Golub Capital with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golub Capital and Hercules Capital.
Diversification Opportunities for Golub Capital and Hercules Capital
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Golub and Hercules is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Golub 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 Golub Capital BDC 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 Golub Capital i.e., Golub Capital and Hercules Capital go up and down completely randomly.
Pair Corralation between Golub Capital and Hercules Capital
Given the investment horizon of 90 days Golub Capital BDC is expected to under-perform the Hercules Capital. But the stock apears to be less risky and, when comparing its historical volatility, Golub Capital BDC is 1.82 times less risky than Hercules Capital. The stock trades about -0.03 of its potential returns per unit of risk. The Hercules Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,861 in Hercules Capital on August 24, 2024 and sell it today you would lose (8.00) from holding Hercules Capital or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golub Capital BDC vs. Hercules Capital
Performance |
| Timeline |
| Golub Capital BDC |
| Hercules Capital |
Golub Capital and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golub Capital and Hercules Capital
The main advantage of trading using opposite Golub Capital and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golub 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.| Golub Capital vs. BlackRock TCP Capital | Golub Capital vs. Carlyle Secured Lending | Golub Capital vs. Triplepoint Venture Growth | Golub Capital vs. New Mountain Finance |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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