Correlation Between Hawaiian Electric and Hennessy Gas
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Hennessy Gas 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 Hennessy Gas 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 Hennessy Gas Utility, you can compare the effects of market volatilities on Hawaiian Electric and Hennessy Gas 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 Hennessy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Hennessy Gas.
Diversification Opportunities for Hawaiian Electric and Hennessy Gas
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Hennessy is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Hennessy Gas Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Gas Utility 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 Hennessy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Gas Utility has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Hennessy Gas go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Hennessy Gas
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to under-perform the Hennessy Gas. In addition to that, Hawaiian Electric is 5.76 times more volatile than Hennessy Gas Utility. It trades about -0.03 of its total potential returns per unit of risk. Hennessy Gas Utility is currently generating about 0.07 per unit of volatility. If you would invest 2,285 in Hennessy Gas Utility on September 1, 2024 and sell it today you would earn a total of 717.00 from holding Hennessy Gas Utility or generate 31.38% 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. Hennessy Gas Utility
Performance |
| Timeline |
| Hawaiian Electric |
| Hennessy Gas Utility |
Hawaiian Electric and Hennessy Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Hennessy Gas
The main advantage of trading using opposite Hawaiian Electric and Hennessy Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Hennessy Gas 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 Hennessy Gas will offset losses from the drop in Hennessy Gas' long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| Hennessy Gas vs. Siit Emerging Markets | Hennessy Gas vs. Harbor Diversified International | Hennessy Gas vs. Aqr Long Short Equity | Hennessy Gas vs. Vanguard Developed Markets |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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