Correlation Between WhiteHorse Finance and Hercules Capital
Can any of the company-specific risk be diversified away by investing in both WhiteHorse Finance 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 WhiteHorse Finance and Hercules Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WhiteHorse Finance and Hercules Capital, you can compare the effects of market volatilities on WhiteHorse Finance 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 WhiteHorse Finance with a short position of Hercules Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of WhiteHorse Finance and Hercules Capital.
Diversification Opportunities for WhiteHorse Finance and Hercules Capital
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WhiteHorse and Hercules is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding WhiteHorse Finance and Hercules Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Capital and WhiteHorse Finance 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 WhiteHorse Finance 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 WhiteHorse Finance i.e., WhiteHorse Finance and Hercules Capital go up and down completely randomly.
Pair Corralation between WhiteHorse Finance and Hercules Capital
Considering the 90-day investment horizon WhiteHorse Finance is expected to under-perform the Hercules Capital. In addition to that, WhiteHorse Finance is 1.01 times more volatile than Hercules Capital. It trades about -0.44 of its total potential returns per unit of risk. Hercules Capital is currently generating about -0.16 per unit of volatility. If you would invest 1,973 in Hercules Capital on August 29, 2024 and sell it today you would lose (91.00) from holding Hercules Capital or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WhiteHorse Finance vs. Hercules Capital
Performance |
| Timeline |
| WhiteHorse Finance |
| Hercules Capital |
WhiteHorse Finance and Hercules Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WhiteHorse Finance and Hercules Capital
The main advantage of trading using opposite WhiteHorse Finance and Hercules Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WhiteHorse Finance 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.| WhiteHorse Finance vs. Monroe Capital Corp | WhiteHorse Finance vs. Portman Ridge Finance | WhiteHorse Finance vs. Fidus Investment Corp | WhiteHorse Finance vs. Diamond Hill Investment |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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