Correlation Between Hawaiian Electric and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and WEC Energy 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 WEC Energy 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 WEC Energy Group, you can compare the effects of market volatilities on Hawaiian Electric and WEC Energy 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 WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and WEC Energy.
Diversification Opportunities for Hawaiian Electric and WEC Energy
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and WEC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy 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 WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and WEC Energy go up and down completely randomly.
Pair Corralation between Hawaiian Electric and WEC Energy
Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 2.29 times more return on investment than WEC Energy. However, Hawaiian Electric is 2.29 times more volatile than WEC Energy Group. It trades about 0.18 of its potential returns per unit of risk. WEC Energy Group is currently generating about 0.24 per unit of risk. If you would invest 1,007 in Hawaiian Electric Industries on August 28, 2024 and sell it today you would earn a total of 91.00 from holding Hawaiian Electric Industries or generate 9.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. WEC Energy Group
Performance |
| Timeline |
| Hawaiian Electric |
| WEC Energy Group |
Hawaiian Electric and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and WEC Energy
The main advantage of trading using opposite Hawaiian Electric and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy's long position.| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy |
| WEC Energy vs. Alliant Energy Corp | WEC Energy vs. CMS Energy | WEC Energy vs. Exelon | WEC Energy vs. Evergy, |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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