Correlation Between Hercules Capital and Westwood Holdings
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and Westwood Holdings 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 Westwood Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and Westwood Holdings Group, you can compare the effects of market volatilities on Hercules Capital and Westwood Holdings 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 Westwood Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Westwood Holdings.
Diversification Opportunities for Hercules Capital and Westwood Holdings
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hercules and Westwood is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Westwood Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Holdings 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 Westwood Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Holdings has no effect on the direction of Hercules Capital i.e., Hercules Capital and Westwood Holdings go up and down completely randomly.
Pair Corralation between Hercules Capital and Westwood Holdings
Given the investment horizon of 90 days Hercules Capital is expected to generate 1.44 times less return on investment than Westwood Holdings. But when comparing it to its historical volatility, Hercules Capital is 1.63 times less risky than Westwood Holdings. It trades about 0.09 of its potential returns per unit of risk. Westwood Holdings Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,061 in Westwood Holdings Group on September 2, 2024 and sell it today you would earn a total of 519.00 from holding Westwood Holdings Group or generate 48.92% 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. Westwood Holdings Group
Performance |
| Timeline |
| Hercules Capital |
| Westwood Holdings |
Hercules Capital and Westwood Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and Westwood Holdings
The main advantage of trading using opposite Hercules Capital and Westwood Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, Westwood Holdings 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 Westwood Holdings will offset losses from the drop in Westwood Holdings' 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 |
| Westwood Holdings vs. MFS Investment Grade | Westwood Holdings vs. Eaton Vance National | Westwood Holdings vs. Invesco Trust For | Westwood Holdings vs. Invesco California Value |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |