Correlation Between Hawaiian Electric and Pacific Gas

Can any of the company-specific risk be diversified away by investing in both Hawaiian Electric and Pacific Gas 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 Pacific Gas 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 Pacific Gas and, you can compare the effects of market volatilities on Hawaiian Electric and Pacific Gas 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 Pacific Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawaiian Electric and Pacific Gas.

Diversification Opportunities for Hawaiian Electric and Pacific Gas

-0.36

Correlation Coefficient

Hawaiian Electric  Pacific Gas

Very good diversification

The 3 months correlation between Hawaiian and Pacific is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Pacific Gas and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Gas 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 Pacific Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Gas has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Pacific Gas go up and down completely randomly.

Pair Corralation between Hawaiian Electric and Pacific Gas

Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to under-perform the Pacific Gas. In addition to that, Hawaiian Electric is 2.01 times more volatile than Pacific Gas and. It trades about -0.1 of its total potential returns per unit of risk. Pacific Gas and is currently generating about 0.01 per unit of volatility. If you would invest  2,197  in Pacific Gas and on September 14, 2024 and sell it today you would earn a total of  2.00  from holding Pacific Gas and or generate 0.09% 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.  Pacific Gas and

Hawaiian Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Electric Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pacific Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Gas and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Pacific Gas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hawaiian Electric and Pacific Gas

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

The idea behind Hawaiian Electric Industries and Pacific Gas and 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.