Correlation Between Hercules Capital and Carlyle Secured

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

By analyzing existing cross correlation between Hercules Capital and Carlyle Secured Lending, you can compare the effects of market volatilities on Hercules Capital and Carlyle Secured 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 Carlyle Secured. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and Carlyle Secured.

Diversification Opportunities for Hercules Capital and Carlyle Secured

0.66

Correlation Coefficient

Hercules Capital  Carlyle Secured

Poor diversification

The 3 months correlation between Hercules and Carlyle is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Carlyle Secured Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Secured Lending 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 Carlyle Secured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Secured Lending has no effect on the direction of Hercules Capital i.e., Hercules Capital and Carlyle Secured go up and down completely randomly.

Pair Corralation between Hercules Capital and Carlyle Secured

Given the investment horizon of 90 days Hercules Capital is expected to generate 1.14 times more return on investment than Carlyle Secured. However, Hercules Capital is 1.14 times more volatile than Carlyle Secured Lending. It trades about -0.02 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about -0.07 per unit of risk. If you would invest  1,964  in Hercules Capital on December 29, 2024 and sell it today you would lose (38.00) from holding Hercules Capital or give up 1.93% of portfolio value over 90 days.

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

Hercules Capital  vs.  Carlyle Secured Lending

Hercules Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hercules Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hercules Capital is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Secured Lending has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hercules Capital and Carlyle Secured

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

The idea behind Hercules Capital and Carlyle Secured Lending 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.