Correlation Between Hawaiian Electric and IShares 10
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and IShares 10 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 IShares 10 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 iShares 10 Year, you can compare the effects of market volatilities on Hawaiian Electric and IShares 10 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 IShares 10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and IShares 10.
Diversification Opportunities for Hawaiian Electric and IShares 10
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hawaiian and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and iShares 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 10 Year 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 IShares 10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 10 Year has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and IShares 10 go up and down completely randomly.
Pair Corralation between Hawaiian Electric and IShares 10
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to under-perform the IShares 10. In addition to that, Hawaiian Electric is 6.71 times more volatile than iShares 10 Year. It trades about -0.02 of its total potential returns per unit of risk. iShares 10 Year is currently generating about 0.02 per unit of volatility. If you would invest 4,715 in iShares 10 Year on December 12, 2024 and sell it today you would earn a total of 283.00 from holding iShares 10 Year or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. iShares 10 Year
Performance |
| Timeline |
| Hawaiian Electric |
| iShares 10 Year |
Hawaiian Electric and IShares 10 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and IShares 10
The main advantage of trading using opposite Hawaiian Electric and IShares 10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, IShares 10 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 IShares 10 will offset losses from the drop in IShares 10'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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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