Correlation Between Hawaiian Electric and BetaPro Canadian
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and BetaPro Canadian 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 BetaPro Canadian 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 BetaPro Canadian Gold, you can compare the effects of market volatilities on Hawaiian Electric and BetaPro Canadian 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 BetaPro Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and BetaPro Canadian.
Diversification Opportunities for Hawaiian Electric and BetaPro Canadian
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and BetaPro is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and BetaPro Canadian Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Canadian Gold 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 BetaPro Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Canadian Gold has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and BetaPro Canadian go up and down completely randomly.
Pair Corralation between Hawaiian Electric and BetaPro Canadian
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 1.38 times more return on investment than BetaPro Canadian. However, Hawaiian Electric is 1.38 times more volatile than BetaPro Canadian Gold. It trades about -0.03 of its potential returns per unit of risk. BetaPro Canadian Gold is currently generating about -0.05 per unit of risk. If you would invest 3,603 in Hawaiian Electric Industries on December 4, 2024 and sell it today you would lose (2,533) from holding Hawaiian Electric Industries or give up 70.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. BetaPro Canadian Gold
Performance |
| Timeline |
| Hawaiian Electric |
| BetaPro Canadian Gold |
Hawaiian Electric and BetaPro Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and BetaPro Canadian
The main advantage of trading using opposite Hawaiian Electric and BetaPro Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, BetaPro Canadian 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 BetaPro Canadian will offset losses from the drop in BetaPro Canadian's long position.| Hawaiian Electric vs. DTE Energy | ||
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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