Correlation Between Hawaiian Electric and Entergy
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Entergy 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 Entergy 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 Entergy, you can compare the effects of market volatilities on Hawaiian Electric and Entergy 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 Entergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Entergy.
Diversification Opportunities for Hawaiian Electric and Entergy
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Entergy is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Entergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entergy 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 Entergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entergy has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Entergy go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Entergy
Allowing for the 90-day total investment horizon Hawaiian Electric is expected to generate 2.06 times less return on investment than Entergy. But when comparing it to its historical volatility, Hawaiian Electric Industries is 1.55 times less risky than Entergy. It trades about 0.12 of its potential returns per unit of risk. Entergy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 13,389 in Entergy on August 23, 2024 and sell it today you would earn a total of 1,766 from holding Entergy or generate 13.19% 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. Entergy
Performance |
| Timeline |
| Hawaiian Electric |
| Entergy |
Hawaiian Electric and Entergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Entergy
The main advantage of trading using opposite Hawaiian Electric and Entergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Entergy 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 Entergy will offset losses from the drop in Entergy's long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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