Correlation Between VMware and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both VMware 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 VMware and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and Berkshire Hathaway, you can compare the effects of market volatilities on VMware 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 VMware with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Berkshire Hathaway.
Diversification Opportunities for VMware and Berkshire Hathaway
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VMware and Berkshire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and VMware 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 VMware Inc 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 VMware i.e., VMware and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between VMware and Berkshire Hathaway
If you would invest 12,698 in VMware Inc on January 25, 2024 and sell it today you would earn a total of 1,550 from holding VMware Inc or generate 12.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
VMware Inc vs. Berkshire Hathaway
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Berkshire Hathaway |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
VMware and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and Berkshire Hathaway
The main advantage of trading using opposite VMware and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware 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.The idea behind VMware Inc and Berkshire Hathaway 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.| Berkshire Hathaway vs. Bridgford Foods | Berkshire Hathaway vs. Sligro Food Group | Berkshire Hathaway vs. The Coca Cola | Berkshire Hathaway vs. Natural Alternatives 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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