Correlation Between Hawaiian Electric and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Hawaiian Electric and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Dow Jones.
Diversification Opportunities for Hawaiian Electric and Dow Jones
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Dow is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Dow Jones go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Dow Jones
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 2.43 times more return on investment than Dow Jones. However, Hawaiian Electric is 2.43 times more volatile than Dow Jones Industrial. It trades about 0.18 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 1,007 in Hawaiian Electric Industries on August 28, 2024 and sell it today you would earn a total of 91.00 from holding Hawaiian Electric Industries or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. Dow Jones Industrial
Performance |
| Timeline |
Hawaiian Electric and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Hawaiian Electric Industries
Pair trading matchups for Hawaiian Electric
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Hawaiian Electric and Dow Jones
The main advantage of trading using opposite Hawaiian Electric and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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