Correlation Between Hercules Capital and Oxford Square

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

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

Diversification Opportunities for Hercules Capital and Oxford Square

0.36

Correlation Coefficient

Hercules Capital  Oxford Square

Weak diversification

The 3 months correlation between Hercules and Oxford is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and Oxford Square Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Square 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 Oxford Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Square Capital has no effect on the direction of Hercules Capital i.e., Hercules Capital and Oxford Square go up and down completely randomly.

Pair Corralation between Hercules Capital and Oxford Square

Given the investment horizon of 90 days Hercules Capital is expected to under-perform the Oxford Square. In addition to that, Hercules Capital is 1.27 times more volatile than Oxford Square Capital. It trades about -0.02 of its total potential returns per unit of risk. Oxford Square Capital is currently generating about 0.15 per unit of volatility. If you would invest  232.00  in Oxford Square Capital on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Oxford Square Capital or generate 10.34% return on investment over 90 days.

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

Hercules Capital  vs.  Oxford Square Capital

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.

Oxford Square Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Square Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Oxford Square may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hercules Capital and Oxford Square

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

The idea behind Hercules Capital and Oxford Square Capital 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.