Correlation Between Hercules Capital and Eagle Point
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Eagle Point 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 Eagle Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and Eagle Point Credit, you can compare the effects of market volatilities on Hercules Capital and Eagle Point 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 Eagle Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Eagle Point.
Diversification Opportunities for Hercules Capital and Eagle Point
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hercules and Eagle is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Eagle Point Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Point Credit 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 Eagle Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Point Credit has no effect on the direction of Hercules Capital i.e., Hercules Capital and Eagle Point go up and down completely randomly.
Pair Corralation between Hercules Capital and Eagle Point
Given the investment horizon of 90 days Hercules Capital is expected to under-perform the Eagle Point. In addition to that, Hercules Capital is 1.36 times more volatile than Eagle Point Credit. It trades about -0.15 of its total potential returns per unit of risk. Eagle Point Credit is currently generating about -0.16 per unit of volatility. If you would invest 942.00 in Eagle Point Credit on August 28, 2024 and sell it today you would lose (31.00) from holding Eagle Point Credit or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hercules Capital vs. Eagle Point Credit
Performance |
| Timeline |
| Hercules Capital |
| Eagle Point Credit |
Hercules Capital and Eagle Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and Eagle Point
The main advantage of trading using opposite Hercules Capital and Eagle Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Eagle Point 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 Eagle Point will offset losses from the drop in Eagle Point'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 |
| Eagle Point vs. Cornerstone Strategic Return | Eagle Point vs. Cornerstone Strategic Value | Eagle Point vs. Oxford Square Capital | Eagle Point vs. Guggenheim Strategic Opportunities |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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