Correlation Between Berkshire Hathaway and Loews Corp
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Loews Corp 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 Berkshire Hathaway and Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Loews Corp, you can compare the effects of market volatilities on Berkshire Hathaway and Loews Corp 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 Berkshire Hathaway with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Loews Corp.
Diversification Opportunities for Berkshire Hathaway and Loews Corp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Berkshire and Loews is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Loews Corp go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Loews Corp
Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the Loews Corp. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.23 times less risky than Loews Corp. The stock trades about -0.09 of its potential returns per unit of risk. The Loews Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 7,689 in Loews Corp on January 26, 2024 and sell it today you would lose (8.00) from holding Loews Corp or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Loews Corp
Performance |
| Timeline |
| Berkshire Hathaway |
| Loews Corp |
Berkshire Hathaway and Loews Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Loews Corp
The main advantage of trading using opposite Berkshire Hathaway and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
| Loews Corp vs. Kemper | Loews Corp vs. RLI Corp | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Argo Group International |
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 Stocks Directory module to find actively traded stocks across global markets.
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