Correlation Between Hercules Capital and WhiteHorse Finance

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

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

Diversification Opportunities for Hercules Capital and WhiteHorse Finance

0.63

Correlation Coefficient

Hercules Capital  WhiteHorse Finance

Poor diversification

The 3 months correlation between Hercules and WhiteHorse is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and WhiteHorse Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteHorse Finance 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 WhiteHorse Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteHorse Finance has no effect on the direction of Hercules Capital i.e., Hercules Capital and WhiteHorse Finance go up and down completely randomly.

Pair Corralation between Hercules Capital and WhiteHorse Finance

Given the investment horizon of 90 days Hercules Capital is expected to generate 130.33 times less return on investment than WhiteHorse Finance. But when comparing it to its historical volatility, Hercules Capital is 1.01 times less risky than WhiteHorse Finance. It trades about 0.0 of its potential returns per unit of risk. WhiteHorse Finance is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  938.00  in WhiteHorse Finance on December 27, 2024 and sell it today you would earn a total of  17.00  from holding WhiteHorse Finance or generate 1.81% return on investment over 90 days.

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

Hercules Capital  vs.  WhiteHorse Finance

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.

WhiteHorse Finance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WhiteHorse Finance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, WhiteHorse Finance is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hercules Capital and WhiteHorse Finance

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

The idea behind Hercules Capital and WhiteHorse Finance 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..