Correlation Between Hercules Capital and BlackRock Capital

Can any of the company-specific risk be diversified away by investing in both Hercules Capital and BlackRock 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 Hercules Capital and BlackRock Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hercules Capital and BlackRock Capital Allocation, you can compare the effects of market volatilities on Hercules Capital and BlackRock 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 Hercules Capital with a short position of BlackRock Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and BlackRock Capital.

Diversification Opportunities for Hercules Capital and BlackRock Capital

0.48

Correlation Coefficient

Hercules Capital  BlackRock Capital

Very weak diversification

The 3 months correlation between Hercules and BlackRock is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital and Hercules 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 Hercules Capital are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of Hercules Capital i.e., Hercules Capital and BlackRock Capital go up and down completely randomly.

Pair Corralation between Hercules Capital and BlackRock Capital

Given the investment horizon of 90 days Hercules Capital is expected to generate 0.74 times more return on investment than BlackRock Capital. However, Hercules Capital is 1.35 times less risky than BlackRock Capital. It trades about 0.43 of its potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.01 per unit of risk. If you would invest  1,817  in Hercules Capital on February 4, 2024 and sell it today you would earn a total of  126.00  from holding Hercules Capital or generate 6.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hercules Capital  vs.  BlackRock Capital Allocation

Hercules Capital

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hercules Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hercules Capital and BlackRock Capital

The main advantage of trading using opposite Hercules Capital and BlackRock Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hercules Capital position performs unexpectedly, BlackRock 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 BlackRock Capital will offset losses from the drop in BlackRock Capital's long position.

The idea behind Hercules Capital and BlackRock Capital Allocation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.