Correlation Between Hawaiian Electric and New Fortress
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and New Fortress 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 New Fortress 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 New Fortress Energy, you can compare the effects of market volatilities on Hawaiian Electric and New Fortress 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 New Fortress. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and New Fortress.
Diversification Opportunities for Hawaiian Electric and New Fortress
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hawaiian and New is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and New Fortress Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Fortress Energy 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 New Fortress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Fortress Energy has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and New Fortress go up and down completely randomly.
Pair Corralation between Hawaiian Electric and New Fortress
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 1.34 times more return on investment than New Fortress. However, Hawaiian Electric is 1.34 times more volatile than New Fortress Energy. It trades about -0.03 of its potential returns per unit of risk. New Fortress Energy is currently generating about -0.06 per unit of risk. If you would invest 3,887 in Hawaiian Electric Industries on August 27, 2024 and sell it today you would lose (2,826) from holding Hawaiian Electric Industries or give up 72.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. New Fortress Energy
Performance |
| Timeline |
| Hawaiian Electric |
| New Fortress Energy |
Hawaiian Electric and New Fortress Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and New Fortress
The main advantage of trading using opposite Hawaiian Electric and New Fortress positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, New Fortress 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 New Fortress will offset losses from the drop in New Fortress' long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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