Correlation Between Hawaiian Electric and Eversource Energy
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Eversource Energy 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 Eversource Energy 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 Eversource Energy, you can compare the effects of market volatilities on Hawaiian Electric and Eversource Energy 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 Eversource Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Eversource Energy.
Diversification Opportunities for Hawaiian Electric and Eversource Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hawaiian and Eversource is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Eversource Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eversource Energy 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 Eversource Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eversource Energy has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Eversource Energy go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Eversource Energy
Allowing for the 90-day total investment horizon Hawaiian Electric is expected to generate 1.36 times less return on investment than Eversource Energy. In addition to that, Hawaiian Electric is 3.06 times more volatile than Eversource Energy. It trades about 0.01 of its total potential returns per unit of risk. Eversource Energy is currently generating about 0.04 per unit of volatility. If you would invest 5,677 in Eversource Energy on August 26, 2024 and sell it today you would earn a total of 661.00 from holding Eversource Energy or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. Eversource Energy
Performance |
| Timeline |
| Hawaiian Electric |
| Eversource Energy |
Hawaiian Electric and Eversource Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Eversource Energy
The main advantage of trading using opposite Hawaiian Electric and Eversource Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Eversource Energy 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 Eversource Energy will offset losses from the drop in Eversource Energy's long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| Eversource Energy vs. CenterPoint Energy | Eversource Energy vs. FirstEnergy | Eversource Energy vs. Pinnacle West Capital | Eversource Energy vs. Edison International |
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 Stocks Directory module to find actively traded stocks across global markets.
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