Correlation Between Hawaiian Electric and FirstEnergy
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and FirstEnergy 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 FirstEnergy 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 FirstEnergy, you can compare the effects of market volatilities on Hawaiian Electric and FirstEnergy 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 FirstEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and FirstEnergy.
Diversification Opportunities for Hawaiian Electric and FirstEnergy
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hawaiian and FirstEnergy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and FirstEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstEnergy 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 FirstEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstEnergy has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and FirstEnergy go up and down completely randomly.
Pair Corralation between Hawaiian Electric and FirstEnergy
Allowing for the 90-day total investment horizon Hawaiian Electric is expected to generate 1.76 times less return on investment than FirstEnergy. In addition to that, Hawaiian Electric is 4.57 times more volatile than FirstEnergy. It trades about 0.01 of its total potential returns per unit of risk. FirstEnergy is currently generating about 0.07 per unit of volatility. If you would invest 3,540 in FirstEnergy on August 26, 2024 and sell it today you would earn a total of 639.00 from holding FirstEnergy or generate 18.05% 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. FirstEnergy
Performance |
| Timeline |
| Hawaiian Electric |
| FirstEnergy |
Hawaiian Electric and FirstEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and FirstEnergy
The main advantage of trading using opposite Hawaiian Electric and FirstEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, FirstEnergy 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 FirstEnergy will offset losses from the drop in FirstEnergy's long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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