Correlation Between Hawaiian Electric and WashTec AG
Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and WashTec AG 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 WashTec AG 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 WashTec AG, you can compare the effects of market volatilities on Hawaiian Electric and WashTec AG 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 WashTec AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and WashTec AG.
Diversification Opportunities for Hawaiian Electric and WashTec AG
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawaiian and WashTec is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and WashTec AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WashTec AG 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 WashTec AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WashTec AG has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and WashTec AG go up and down completely randomly.
Pair Corralation between Hawaiian Electric and WashTec AG
Allowing for the 90-day total investment horizon Hawaiian Electric is expected to generate 2.23 times less return on investment than WashTec AG. In addition to that, Hawaiian Electric is 1.65 times more volatile than WashTec AG. It trades about 0.01 of its total potential returns per unit of risk. WashTec AG is currently generating about 0.05 per unit of volatility. If you would invest 287.00 in WashTec AG on December 10, 2024 and sell it today you would earn a total of 88.00 from holding WashTec AG or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Hawaiian Electric Industries vs. WashTec AG
Performance |
| Timeline |
| Hawaiian Electric |
| WashTec AG |
Hawaiian Electric and WashTec AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawaiian Electric and WashTec AG
The main advantage of trading using opposite Hawaiian Electric and WashTec AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Electric position performs unexpectedly, WashTec AG 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 WashTec AG will offset losses from the drop in WashTec AG'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 CEOs Directory module to screen CEOs from public companies around the world.
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