Correlation Between Tradeweb Markets and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both Tradeweb Markets 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 Tradeweb Markets and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tradeweb Markets and Hercules Capital, you can compare the effects of market volatilities on Tradeweb Markets 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 Tradeweb Markets with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tradeweb Markets and Hercules Capital.
Diversification Opportunities for Tradeweb Markets and Hercules Capital
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tradeweb and Hercules is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tradeweb Markets and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and Tradeweb Markets 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 Tradeweb Markets 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 Tradeweb Markets i.e., Tradeweb Markets and Hercules Capital go up and down completely randomly.
Pair Corralation between Tradeweb Markets and Hercules Capital
Allowing for the 90-day total investment horizon Tradeweb Markets is expected to generate 0.94 times more return on investment than Hercules Capital. However, Tradeweb Markets is 1.06 times less risky than Hercules Capital. It trades about 0.14 of its potential returns per unit of risk. Hercules Capital is currently generating about -0.15 per unit of risk. If you would invest 13,126 in Tradeweb Markets on August 27, 2024 and sell it today you would earn a total of 473.00 from holding Tradeweb Markets or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tradeweb Markets vs. Hercules Capital
Performance |
| Timeline |
| Tradeweb Markets |
| Hercules Capital |
Tradeweb Markets and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tradeweb Markets and Hercules Capital
The main advantage of trading using opposite Tradeweb Markets and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tradeweb Markets 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.| Tradeweb Markets vs. Raymond James Financial | Tradeweb Markets vs. PJT Partners | Tradeweb Markets vs. Moelis Co | Tradeweb Markets vs. LPL Financial Holdings |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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