Correlation Between Hercules Capital and WisdomTree

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

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

Diversification Opportunities for Hercules Capital and WisdomTree

0.83

Correlation Coefficient

Hercules Capital  WisdomTree

Very poor diversification

The 3 months correlation between Hercules and WisdomTree is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hercules Capital and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Hercules Capital i.e., Hercules Capital and WisdomTree go up and down completely randomly.

Pair Corralation between Hercules Capital and WisdomTree

Given the investment horizon of 90 days Hercules Capital is expected to generate 2.09 times less return on investment than WisdomTree. But when comparing it to its historical volatility, Hercules Capital is 1.44 times less risky than WisdomTree. It trades about 0.05 of its potential returns per unit of risk. WisdomTree is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  689.00  in WisdomTree on July 1, 2025 and sell it today you would earn a total of  697.00  from holding WisdomTree or generate 101.16% return on investment over 90 days.

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

Hercules Capital  vs.  WisdomTree

Hercules Capital

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Hercules Capital are ranked lower than 8 (%) 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 October 2025.

WisdomTree

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, WisdomTree unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hercules Capital and WisdomTree

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

The idea behind Hercules Capital and WisdomTree 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.