Correlation Between Hawaiian Electric and Spire

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

Diversification Opportunities for Hawaiian Electric and Spire

0.83

Correlation Coefficient

Hawaiian Electric  Spire

Very poor diversification

The 3 months correlation between Hawaiian and Spire is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hawaiian Electric Industries and Spire Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spire Inc 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 Spire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spire Inc has no effect on the direction of Hawaiian Electric i.e., Hawaiian Electric and Spire go up and down completely randomly.

Pair Corralation between Hawaiian Electric and Spire

Allowing for the 90-day total investment horizon Hawaiian Electric is expected to generate 1.29 times less return on investment than Spire. In addition to that, Hawaiian Electric is 2.26 times more volatile than Spire Inc. It trades about 0.07 of its total potential returns per unit of risk. Spire Inc is currently generating about 0.2 per unit of volatility. If you would invest  6,643  in Spire Inc on December 27, 2024 and sell it today you would earn a total of  1,088  from holding Spire Inc or generate 16.38% return on investment over 90 days.

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

Hawaiian Electric Industries  vs.  Spire Inc

Hawaiian Electric

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hawaiian Electric Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Hawaiian Electric exhibited solid returns over the last few months and may actually be approaching a breakup point.

Spire Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Spire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hawaiian Electric and Spire

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

The idea behind Hawaiian Electric Industries and Spire Inc 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.