Correlation Between OFS Capital and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both OFS Capital 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 OFS Capital and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Capital Corp and Hercules Capital, you can compare the effects of market volatilities on OFS Capital 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 OFS Capital with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Capital and Hercules Capital.
Diversification Opportunities for OFS Capital and Hercules Capital
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OFS and Hercules is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding OFS Capital Corp and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and OFS 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 OFS Capital Corp 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 OFS Capital i.e., OFS Capital and Hercules Capital go up and down completely randomly.
Pair Corralation between OFS Capital and Hercules Capital
Considering the 90-day investment horizon OFS Capital Corp is expected to generate 0.46 times more return on investment than Hercules Capital. However, OFS Capital Corp is 2.17 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 -0.15 per unit of risk. If you would invest 815.00 in OFS Capital Corp on August 28, 2024 and sell it today you would lose (3.00) from holding OFS Capital Corp or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Capital Corp vs. Hercules Capital
Performance |
| Timeline |
| OFS Capital Corp |
| Hercules Capital |
OFS Capital and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Capital and Hercules Capital
The main advantage of trading using opposite OFS Capital and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Capital 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.| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
| Hercules Capital vs. Main Street Capital | Hercules Capital vs. PennantPark Floating Rate | Hercules Capital vs. FS KKR Capital | Hercules 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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