Correlation Between Hercules Capital and MFS Charter

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

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

Diversification Opportunities for Hercules Capital and MFS Charter

0.77

Correlation Coefficient

Hercules Capital  MFS Charter

Poor diversification

The 3 months correlation between Hercules and MFS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and MFS Charter Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Charter 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 MFS Charter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Charter Income has no effect on the direction of Hercules Capital i.e., Hercules Capital and MFS Charter go up and down completely randomly.

Pair Corralation between Hercules Capital and MFS Charter

Given the investment horizon of 90 days Hercules Capital is expected to generate 2.92 times more return on investment than MFS Charter. However, Hercules Capital is 2.92 times more volatile than MFS Charter Income. It trades about 0.16 of its potential returns per unit of risk. MFS Charter Income is currently generating about 0.16 per unit of risk. If you would invest  1,725  in Hercules Capital on May 2, 2025 and sell it today you would earn a total of  166.00  from holding Hercules Capital or generate 9.62% 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.  MFS Charter Income

Hercules Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Hercules Capital may actually be approaching a critical reversion point that can send shares even higher in August 2025.

MFS Charter Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Charter Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, MFS Charter is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Hercules Capital and MFS Charter

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

The idea behind Hercules Capital and MFS Charter 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 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..