Correlation Between Hawaiian Holdings and Brookfield Business

Can any of the company-specific risk be diversified away by investing in both Hawaiian Holdings and Brookfield Business 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 Holdings and Brookfield Business into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hawaiian Holdings and Brookfield Business Partners, you can compare the effects of market volatilities on Hawaiian Holdings and Brookfield Business 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 Holdings with a short position of Brookfield Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Holdings and Brookfield Business.

Diversification Opportunities for Hawaiian Holdings and Brookfield Business

0.58

Correlation Coefficient

Hawaiian Holdings  Brookfield Business

Very weak diversification

The 3 months correlation between Hawaiian and Brookfield is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Holdings and Brookfield Business Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Business and Hawaiian Holdings 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 Holdings are associated (or correlated) with Brookfield Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Business has no effect on the direction of Hawaiian Holdings i.e., Hawaiian Holdings and Brookfield Business go up and down completely randomly.

Pair Corralation between Hawaiian Holdings and Brookfield Business

Allowing for the 90-day total investment horizon Hawaiian Holdings is expected to generate 0.7 times more return on investment than Brookfield Business. However, Hawaiian Holdings is 1.43 times less risky than Brookfield Business. It trades about -0.27 of its potential returns per unit of risk. Brookfield Business Partners is currently generating about -0.27 per unit of risk. If you would invest  1,330  in Hawaiian Holdings on January 26, 2024 and sell it today you would lose (88.00) from holding Hawaiian Holdings or give up 6.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Hawaiian Holdings  vs.  Brookfield Business Partners

Hawaiian Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Brookfield Business

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Business Partners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hawaiian Holdings and Brookfield Business

The main advantage of trading using opposite Hawaiian Holdings and Brookfield Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawaiian Holdings position performs unexpectedly, Brookfield Business 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 Brookfield Business will offset losses from the drop in Brookfield Business' long position.

The idea behind Hawaiian Holdings and Brookfield Business Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.