Correlation Between Hawaiian Electric and Old National

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

Diversification Opportunities for Hawaiian Electric and Old National

0.36

Correlation Coefficient

Hawaiian Electric  Old National

Weak diversification

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

Pair Corralation between Hawaiian Electric and Old National

Allowing for the 90-day total investment horizon Hawaiian Electric Industries is expected to generate 2.56 times more return on investment than Old National. However, Hawaiian Electric is 2.56 times more volatile than Old National Bancorp. It trades about 0.25 of its potential returns per unit of risk. Old National Bancorp is currently generating about -0.38 per unit of risk. If you would invest  948.00  in Hawaiian Electric Industries on December 8, 2024 and sell it today you would earn a total of  197.00  from holding Hawaiian Electric Industries or generate 20.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Hawaiian Electric Industries  vs.  Old National Bancorp

Hawaiian Electric

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hawaiian Electric Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Hawaiian Electric may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Old National Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Old National Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Old National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hawaiian Electric and Old National

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

The idea behind Hawaiian Electric Industries and Old National Bancorp 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.