Correlation Between Hawaiian Electric and Exelon
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Exelon 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 Exelon 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 Exelon, you can compare the effects of market volatilities on Hawaiian Electric and Exelon 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 Exelon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Exelon.
Diversification Opportunities for Hawaiian Electric and Exelon
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Exelon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Exelon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelon 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 Exelon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelon has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Exelon go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Exelon
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 2.14 times more return on investment than Exelon. However, Hawaiian Electric is 2.14 times more volatile than Exelon. It trades about 0.11 of its potential returns per unit of risk. Exelon is currently generating about 0.03 per unit of risk. If you would invest 1,000.00 in Hawaiian Electric Industries on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Hawaiian Electric Industries or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. Exelon
Performance |
| Timeline |
| Hawaiian Electric |
| Exelon |
Hawaiian Electric and Exelon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Exelon
The main advantage of trading using opposite Hawaiian Electric and Exelon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Exelon 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 Exelon will offset losses from the drop in Exelon's long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| Exelon vs. Duke Energy | Exelon vs. Dominion Energy | Exelon vs. Southern Company | Exelon vs. Consolidated Edison |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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