Correlation Between Hercules Capital and Stellus Capital
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Stellus 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 Stellus 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 Stellus Capital Investment, you can compare the effects of market volatilities on Hercules Capital and Stellus 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 Stellus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Stellus Capital.
Diversification Opportunities for Hercules Capital and Stellus Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hercules and Stellus is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Stellus Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellus Capital Inve 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 Stellus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellus Capital Inve has no effect on the direction of Hercules Capital i.e., Hercules Capital and Stellus Capital go up and down completely randomly.
Pair Corralation between Hercules Capital and Stellus Capital
Given the investment horizon of 90 days Hercules Capital is expected to generate 1.67 times less return on investment than Stellus Capital. In addition to that, Hercules Capital is 1.28 times more volatile than Stellus Capital Investment. It trades about 0.23 of its total potential returns per unit of risk. Stellus Capital Investment is currently generating about 0.5 per unit of volatility. If you would invest 1,376 in Stellus Capital Investment on November 1, 2024 and sell it today you would earn a total of 114.00 from holding Stellus Capital Investment or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hercules Capital vs. Stellus Capital Investment
Performance |
| Timeline |
| Hercules Capital |
| Stellus Capital Inve |
Hercules Capital and Stellus Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and Stellus Capital
The main advantage of trading using opposite Hercules Capital and Stellus Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Stellus 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 Stellus Capital will offset losses from the drop in Stellus 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 |
| Stellus Capital vs. PennantPark Floating Rate | Stellus Capital vs. Gladstone Capital | Stellus Capital vs. Gladstone Investment | Stellus 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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