Correlation Between Hawaiian Electric and Prudential Utility
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Prudential Utility 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 Prudential Utility 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 Prudential Utility Fund, you can compare the effects of market volatilities on Hawaiian Electric and Prudential Utility 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 Prudential Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Prudential Utility.
Diversification Opportunities for Hawaiian Electric and Prudential Utility
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hawaiian and Prudential is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Prudential Utility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential 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 Prudential Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Utility has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Prudential Utility go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Prudential Utility
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to under-perform the Prudential Utility. In addition to that, Hawaiian Electric is 4.43 times more volatile than Prudential Utility Fund. It trades about -0.03 of its total potential returns per unit of risk. Prudential Utility Fund is currently generating about 0.03 per unit of volatility. If you would invest 1,347 in Prudential Utility Fund on November 27, 2024 and sell it today you would earn a total of 219.00 from holding Prudential Utility Fund or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. Prudential Utility Fund
Performance |
| Timeline |
| Hawaiian Electric |
| Prudential Utility |
Hawaiian Electric and Prudential Utility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Prudential Utility
The main advantage of trading using opposite Hawaiian Electric and Prudential Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Prudential Utility 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 Prudential Utility will offset losses from the drop in Prudential Utility's long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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