Correlation Between PERSIMMON PLC and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both PERSIMMON PLC 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 PERSIMMON PLC and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PERSIMMON PLC and Berkshire Hathaway, you can compare the effects of market volatilities on PERSIMMON PLC 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 PERSIMMON PLC with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of PERSIMMON PLC and Berkshire Hathaway.
Diversification Opportunities for PERSIMMON PLC and Berkshire Hathaway
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PERSIMMON and Berkshire is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding PERSIMMON PLC and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and PERSIMMON PLC 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 PERSIMMON PLC 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 PERSIMMON PLC i.e., PERSIMMON PLC and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between PERSIMMON PLC and Berkshire Hathaway
Assuming the 90 days trading horizon PERSIMMON PLC is expected to under-perform the Berkshire Hathaway. In addition to that, PERSIMMON PLC is 2.25 times more volatile than Berkshire Hathaway. It trades about -0.11 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.16 per unit of volatility. If you would invest 53,000,000 in Berkshire Hathaway on January 26, 2024 and sell it today you would earn a total of 4,300,000 from holding Berkshire Hathaway or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PERSIMMON PLC vs. Berkshire Hathaway
Performance |
| Timeline |
| PERSIMMON PLC |
| Berkshire Hathaway |
PERSIMMON PLC and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PERSIMMON PLC and Berkshire Hathaway
The main advantage of trading using opposite PERSIMMON PLC and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PERSIMMON PLC 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.| PERSIMMON PLC vs. RELIANCE STEEL AL | PERSIMMON PLC vs. BLUESCOPE STEEL | PERSIMMON PLC vs. MINCO SILVER | PERSIMMON PLC vs. Harmony Gold Mining |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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