Correlation Between Hercules Capital and XAI Octagon
Can any of the company-specific risk be diversified away by investing in both Hercules Capital and XAI Octagon 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 XAI Octagon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hercules Capital and XAI Octagon Floating, you can compare the effects of market volatilities on Hercules Capital and XAI Octagon 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 XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and XAI Octagon.
Diversification Opportunities for Hercules Capital and XAI Octagon
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hercules and XAI is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Hercules Capital i.e., Hercules Capital and XAI Octagon go up and down completely randomly.
Pair Corralation between Hercules Capital and XAI Octagon
Given the investment horizon of 90 days Hercules Capital is expected to under-perform the XAI Octagon. In addition to that, Hercules Capital is 3.53 times more volatile than XAI Octagon Floating. It trades about -0.18 of its total potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.31 per unit of volatility. If you would invest 680.00 in XAI Octagon Floating on August 27, 2024 and sell it today you would earn a total of 16.00 from holding XAI Octagon Floating or generate 2.35% 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. XAI Octagon Floating
Performance |
| Timeline |
| Hercules Capital |
| XAI Octagon Floating |
Hercules Capital and XAI Octagon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hercules Capital and XAI Octagon
The main advantage of trading using opposite Hercules Capital and XAI Octagon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, XAI Octagon 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 XAI Octagon will offset losses from the drop in XAI Octagon'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 |
| XAI Octagon vs. Oxford Lane Capital | XAI Octagon vs. Capital Southwest | XAI Octagon vs. Cornerstone Strategic Return | XAI Octagon vs. Cornerstone Strategic 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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