Correlation Between Novus Acquisition and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Novus Acquisition and Berkshire Hathaway 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 Novus Acquisition and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novus Acquisition and and Berkshire Hathaway, you can compare the effects of market volatilities on Novus Acquisition and Berkshire Hathaway 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 Novus Acquisition with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novus Acquisition and Berkshire Hathaway.
Diversification Opportunities for Novus Acquisition and Berkshire Hathaway
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Novus and Berkshire is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Novus Acquisition and and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Novus Acquisition 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 Novus Acquisition and are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Novus Acquisition i.e., Novus Acquisition and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Novus Acquisition and Berkshire Hathaway
Given the investment horizon of 90 days Novus Acquisition and is expected to generate 12.91 times more return on investment than Berkshire Hathaway. However, Novus Acquisition is 12.91 times more volatile than Berkshire Hathaway. It trades about 0.05 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.05 per unit of risk. If you would invest 3.70 in Novus Acquisition and on January 26, 2024 and sell it today you would lose (2.01) from holding Novus Acquisition and or give up 54.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novus Acquisition and vs. Berkshire Hathaway
Performance |
| Timeline |
| Novus Acquisition |
| Berkshire Hathaway |
Novus Acquisition and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novus Acquisition and Berkshire Hathaway
The main advantage of trading using opposite Novus Acquisition and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novus Acquisition position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Novus Acquisition vs. Berkshire Hathaway | Novus Acquisition vs. Berkshire Hathaway | Novus Acquisition vs. American International Group |
| Berkshire Hathaway vs. Stevia Nutra Corp | Berkshire Hathaway vs. Regent Ventures | Berkshire Hathaway vs. Element Global | Berkshire Hathaway vs. Affiliated Resources Corp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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