Correlation Between Edison International and Hawaiian Electric
Can any of the company-specific risk be diversified away by investing in both Edison International 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 Edison International and Hawaiian Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison International and Hawaiian Electric Industries, you can compare the effects of market volatilities on Edison International 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 Edison International with a short position of Hawaiian Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison International and Hawaiian Electric.
Diversification Opportunities for Edison International and Hawaiian Electric
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Edison and Hawaiian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Edison International and Hawaiian Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Electric and Edison International 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 Edison International 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 Edison International i.e., Edison International and Hawaiian Electric go up and down completely randomly.
Pair Corralation between Edison International and Hawaiian Electric
Considering the 90-day investment horizon Edison International is expected to generate 0.41 times more return on investment than Hawaiian Electric. However, Edison International is 2.46 times less risky than Hawaiian Electric. It trades about -0.02 of its potential returns per unit of risk. Hawaiian Electric Industries is currently generating about -0.09 per unit of risk. If you would invest 6,871 in Edison International on January 19, 2024 and sell it today you would lose (58.00) from holding Edison International or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edison International vs. Hawaiian Electric Industries
Performance |
| Timeline |
| Edison International |
| Hawaiian Electric |
Edison International and Hawaiian Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison International and Hawaiian Electric
The main advantage of trading using opposite Edison International and Hawaiian Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison International 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.| Edison International vs. Southern Company | Edison International vs. American Electric Power | Edison International vs. Duke Energy | Edison International vs. Dominion Energy |
| Hawaiian Electric vs. DTE Energy | Hawaiian Electric vs. Alliant Energy Corp | Hawaiian Electric vs. Ameren Corp | Hawaiian Electric vs. CenterPoint 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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