Correlation Between Hawaiian Electric and Royal Caribbean
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Royal Caribbean 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 Royal Caribbean 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 Royal Caribbean Group, you can compare the effects of market volatilities on Hawaiian Electric and Royal Caribbean 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 Royal Caribbean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Royal Caribbean.
Diversification Opportunities for Hawaiian Electric and Royal Caribbean
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and Royal is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Royal Caribbean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Caribbean Group 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 Royal Caribbean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Caribbean Group has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Royal Caribbean go up and down completely randomly.
Pair Corralation between Hawaiian Electric and Royal Caribbean
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 0.78 times more return on investment than Royal Caribbean. However, Hawaiian Electric Industries is 1.27 times less risky than Royal Caribbean. It trades about 0.26 of its potential returns per unit of risk. Royal Caribbean Group is currently generating about -0.06 per unit of risk. If you would invest 818.00 in Hawaiian Electric Industries on December 11, 2024 and sell it today you would earn a total of 307.00 from holding Hawaiian Electric Industries or generate 37.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. Royal Caribbean Group
Performance |
| Timeline |
| Hawaiian Electric |
| Royal Caribbean Group |
Hawaiian Electric and Royal Caribbean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and Royal Caribbean
The main advantage of trading using opposite Hawaiian Electric and Royal Caribbean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, Royal Caribbean 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 Royal Caribbean will offset losses from the drop in Royal Caribbean'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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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