Correlation Between Alliant Energy and Hawaiian Electric
Can any of the company-specific risk be diversified away by investing in both Alliant Energy and Hawaiian Electric 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 Alliant Energy and Hawaiian Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliant Energy Corp and Hawaiian Electric Industries, you can compare the effects of market volatilities on Alliant Energy and Hawaiian Electric 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 Alliant Energy with a short position of Hawaiian Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliant Energy and Hawaiian Electric.
Diversification Opportunities for Alliant Energy and Hawaiian Electric
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alliant and Hawaiian is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alliant Energy Corp and Hawaiian Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Electric and Alliant Energy 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 Alliant Energy Corp are associated (or correlated) with Hawaiian Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Electric has no effect on the direction of Alliant Energy i.e., Alliant Energy and Hawaiian Electric go up and down completely randomly.
Pair Corralation between Alliant Energy and Hawaiian Electric
Considering the 90-day investment horizon Alliant Energy Corp is expected to generate 0.35 times more return on investment than Hawaiian Electric. However, Alliant Energy Corp is 2.87 times less risky than Hawaiian Electric. It trades about 0.1 of its potential returns per unit of risk. Hawaiian Electric Industries is currently generating about -0.06 per unit of risk. If you would invest 4,697 in Alliant Energy Corp on February 25, 2024 and sell it today you would earn a total of 298.00 from holding Alliant Energy Corp or generate 6.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Alliant Energy Corp vs. Hawaiian Electric Industries
Performance |
Timeline |
Alliant Energy Corp |
Hawaiian Electric |
Alliant Energy and Hawaiian Electric Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alliant Energy and Hawaiian Electric
The main advantage of trading using opposite Alliant Energy and Hawaiian Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliant Energy position performs unexpectedly, Hawaiian Electric 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 Hawaiian Electric will offset losses from the drop in Hawaiian Electric's long position.Alliant Energy vs. DTE Energy | Alliant Energy vs. Ameren Corp | Alliant Energy vs. CenterPoint Energy | Alliant Energy vs. CMS Energy |
Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint Energy | Hawaiian Electric vs. CMS 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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