Correlation Between Hercules Capital and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Cornerstone Strategic 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 Hercules Capital and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and Cornerstone Strategic Return, you can compare the effects of market volatilities on Hercules Capital and Cornerstone Strategic 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 Hercules Capital with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Cornerstone Strategic.
Diversification Opportunities for Hercules Capital and Cornerstone Strategic
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hercules and Cornerstone is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Cornerstone Strategic Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Hercules 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 Hercules Capital are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Hercules Capital i.e., Hercules Capital and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Hercules Capital and Cornerstone Strategic
Given the investment horizon of 90 days Hercules Capital is expected to generate 1.32 times less return on investment than Cornerstone Strategic. In addition to that, Hercules Capital is 1.11 times more volatile than Cornerstone Strategic Return. It trades about 0.09 of its total potential returns per unit of risk. Cornerstone Strategic Return is currently generating about 0.13 per unit of volatility. If you would invest 600.00 in Cornerstone Strategic Return on November 9, 2024 and sell it today you would earn a total of 290.00 from holding Cornerstone Strategic Return or generate 48.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hercules Capital vs. Cornerstone Strategic Return
Performance |
| Timeline |
| Hercules Capital |
| Cornerstone Strategic |
Hercules Capital and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and Cornerstone Strategic
The main advantage of trading using opposite Hercules Capital and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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