Correlation Between Hercules Capital and PIMCO Access

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

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

Diversification Opportunities for Hercules Capital and PIMCO Access

0.21

Correlation Coefficient

Hercules Capital  PIMCO Access

Modest diversification

The 3 months correlation between Hercules and PIMCO is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and PIMCO Access Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Access Income 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 PIMCO Access. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Access Income has no effect on the direction of Hercules Capital i.e., Hercules Capital and PIMCO Access go up and down completely randomly.

Pair Corralation between Hercules Capital and PIMCO Access

Given the investment horizon of 90 days Hercules Capital is expected to under-perform the PIMCO Access. In addition to that, Hercules Capital is 2.33 times more volatile than PIMCO Access Income. It trades about -0.02 of its total potential returns per unit of risk. PIMCO Access Income is currently generating about 0.23 per unit of volatility. If you would invest  1,471  in PIMCO Access Income on December 29, 2024 and sell it today you would earn a total of  128.00  from holding PIMCO Access Income or generate 8.7% 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.  PIMCO Access Income

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.

PIMCO Access Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Access Income are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, PIMCO Access may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hercules Capital and PIMCO Access

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

The idea behind Hercules Capital and PIMCO Access Income 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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.