Correlation Between Hercules Capital and MFS Intermediate

Can any of the company-specific risk be diversified away by investing in both Hercules Capital and MFS Intermediate 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 Intermediate 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 Intermediate Income, you can compare the effects of market volatilities on Hercules Capital and MFS Intermediate 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 Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hercules Capital and MFS Intermediate.

Diversification Opportunities for Hercules Capital and MFS Intermediate

0.59

Correlation Coefficient

Hercules Capital  MFS Intermediate

Very weak diversification

The 3 months correlation between Hercules and MFS is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and MFS Intermediate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Intermediate 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 Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Intermediate Income has no effect on the direction of Hercules Capital i.e., Hercules Capital and MFS Intermediate go up and down completely randomly.

Pair Corralation between Hercules Capital and MFS Intermediate

Given the investment horizon of 90 days Hercules Capital is expected to generate 1.56 times more return on investment than MFS Intermediate. However, Hercules Capital is 1.56 times more volatile than MFS Intermediate Income. It trades about 0.15 of its potential returns per unit of risk. MFS Intermediate Income is currently generating about 0.03 per unit of risk. If you would invest  1,750  in Hercules Capital on May 18, 2025 and sell it today you would earn a total of  156.00  from holding Hercules Capital or generate 8.91% return on investment over 90 days.

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

Hercules Capital  vs.  MFS Intermediate 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 11 (%) 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 September 2025.

MFS Intermediate Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Intermediate Income are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, MFS Intermediate is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Hercules Capital and MFS Intermediate

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

The idea behind Hercules Capital and MFS Intermediate 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.