Correlation Between PIMCO Access and Hercules Capital

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

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

Diversification Opportunities for PIMCO Access and Hercules Capital

0.21

Correlation Coefficient

PIMCO Access  Hercules Capital

Modest diversification

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

Pair Corralation between PIMCO Access and Hercules Capital

Given the investment horizon of 90 days PIMCO Access Income is expected to generate 0.43 times more return on investment than Hercules Capital. However, PIMCO Access Income is 2.33 times less risky than Hercules Capital. It trades about 0.23 of its potential returns per unit of risk. Hercules Capital is currently generating about -0.02 per unit of risk. 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

PIMCO Access Income  vs.  Hercules Capital

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.

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.

Pair Trading with PIMCO Access and Hercules Capital

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

The idea behind PIMCO Access Income and Hercules 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..