Correlation Between Hercules Capital and Gladstone Capital
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Gladstone 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 Hercules Capital and Gladstone Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and Gladstone Capital, you can compare the effects of market volatilities on Hercules Capital and Gladstone 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 Hercules Capital with a short position of Gladstone Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Gladstone Capital.
Diversification Opportunities for Hercules Capital and Gladstone Capital
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hercules and Gladstone is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Gladstone Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Capital 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 Gladstone Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Capital has no effect on the direction of Hercules Capital i.e., Hercules Capital and Gladstone Capital go up and down completely randomly.
Pair Corralation between Hercules Capital and Gladstone Capital
Given the investment horizon of 90 days Hercules Capital is expected to generate 2.91 times less return on investment than Gladstone Capital. In addition to that, Hercules Capital is 1.28 times more volatile than Gladstone Capital. It trades about 0.04 of its total potential returns per unit of risk. Gladstone Capital is currently generating about 0.17 per unit of volatility. If you would invest 1,907 in Gladstone Capital on August 27, 2024 and sell it today you would earn a total of 764.00 from holding Gladstone Capital or generate 40.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hercules Capital vs. Gladstone Capital
Performance |
| Timeline |
| Hercules Capital |
| Gladstone Capital |
Hercules Capital and Gladstone Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and Gladstone Capital
The main advantage of trading using opposite Hercules Capital and Gladstone Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Gladstone 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 Gladstone Capital will offset losses from the drop in Gladstone Capital'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 |
| Gladstone Capital vs. Main Street Capital | Gladstone Capital vs. PennantPark Floating Rate | Gladstone Capital vs. Horizon Technology Finance | Gladstone 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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