Correlation Between Hawaiian Electric and Avanza Bank
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Avanza Bank 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 Hawaiian Electric and Avanza Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawaiian Electric Industries and Avanza Bank Holding, you can compare the effects of market volatilities on Hawaiian Electric and Avanza Bank 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 Hawaiian Electric with a short position of Avanza Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Avanza Bank.
Diversification Opportunities for Hawaiian Electric and Avanza Bank
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hawaiian and Avanza is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Avanza Bank Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avanza Bank Holding and Hawaiian Electric 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 Hawaiian Electric Industries are associated (or correlated) with Avanza Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avanza Bank Holding has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Avanza Bank go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Avanza Bank
Allowing for the 90-day total investment horizon Hawaiian Electric is expected to generate 2.47 times less return on investment than Avanza Bank. In addition to that, Hawaiian Electric is 2.49 times more volatile than Avanza Bank Holding. It trades about 0.01 of its total potential returns per unit of risk. Avanza Bank Holding is currently generating about 0.09 per unit of volatility. If you would invest 22,265 in Avanza Bank Holding on December 2, 2024 and sell it today you would earn a total of 9,935 from holding Avanza Bank Holding or generate 44.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. Avanza Bank Holding
Performance |
| Timeline |
| Hawaiian Electric |
| Avanza Bank Holding |
Hawaiian Electric and Avanza Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Avanza Bank
The main advantage of trading using opposite Hawaiian Electric and Avanza Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Avanza Bank 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 Avanza Bank will offset losses from the drop in Avanza Bank's long position.| Hawaiian Electric vs. DTE Energy | ||
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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