Correlation Between Trinity Capital and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Trinity 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 Trinity 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 Trinity Capital and Hercules Capital, you can compare the effects of market volatilities on Trinity 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 Trinity Capital with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trinity Capital and Hercules Capital.
Diversification Opportunities for Trinity Capital and Hercules Capital
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Trinity and Hercules is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Capital and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Trinity 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 Trinity Capital 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 Trinity Capital i.e., Trinity Capital and Hercules Capital go up and down completely randomly.
Pair Corralation between Trinity Capital and Hercules Capital
Given the investment horizon of 90 days Trinity Capital is expected to generate 1.01 times more return on investment than Hercules Capital. However, Trinity Capital is 1.01 times more volatile than Hercules Capital. It trades about 0.08 of its potential returns per unit of risk. Hercules Capital is currently generating about 0.07 per unit of risk. If you would invest 771.00 in Trinity Capital on August 24, 2024 and sell it today you would earn a total of 655.00 from holding Trinity Capital or generate 84.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trinity Capital vs. Hercules Capital
Performance |
| Timeline |
| Trinity Capital |
| Hercules Capital |
Trinity Capital and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trinity Capital and Hercules Capital
The main advantage of trading using opposite Trinity Capital and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trinity 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.| Trinity Capital vs. Carlyle Secured Lending | Trinity Capital vs. Sixth Street Specialty | Trinity Capital vs. Hercules Capital | Trinity Capital vs. BlackRock TCP Capital |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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