Correlation Between International Business and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both International Business and Hercules 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 International Business and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Hercules Capital, you can compare the effects of market volatilities on International Business and Hercules 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 International Business with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Hercules Capital.
Diversification Opportunities for International Business and Hercules Capital
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between International and Hercules is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and International Business 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 International Business Machines are associated (or correlated) with Hercules Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Capital has no effect on the direction of International Business i.e., International Business and Hercules Capital go up and down completely randomly.
Pair Corralation between International Business and Hercules Capital
Assuming the 90 days trading horizon International Business is expected to generate 2.53 times less return on investment than Hercules Capital. But when comparing it to its historical volatility, International Business Machines is 1.0 times less risky than Hercules Capital. It trades about 0.03 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,801 in Hercules Capital on September 25, 2024 and sell it today you would earn a total of 33.00 from holding Hercules Capital or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Hercules Capital
Performance |
| Timeline |
| International Business |
| Hercules Capital |
International Business and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Hercules Capital
The main advantage of trading using opposite International Business and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Hercules 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 Hercules Capital will offset losses from the drop in Hercules Capital's long position.| International Business vs. Apple Inc | International Business vs. Apple Inc | International Business vs. Microsoft | International Business vs. Microsoft |
| Hercules Capital vs. HEMISPHERE EGY | Hercules Capital vs. Spirent Communications plc | Hercules Capital vs. Sixt Leasing SE | Hercules Capital vs. United Internet AG |
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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