Correlation Between Berkshire Hathaway and Berkshire Hathaway

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway 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 Berkshire Hathaway and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway and Berkshire Hathaway, you can compare the effects of market volatilities on Berkshire Hathaway 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 Berkshire Hathaway with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Berkshire Hathaway.

Diversification Opportunities for Berkshire Hathaway and Berkshire Hathaway

1.0

Correlation Coefficient

Berkshire Hathaway  Berkshire Hathaway

No risk reduction

The 3 months correlation between Berkshire and Berkshire is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 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 Berkshire Hathaway i.e., Berkshire Hathaway and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Berkshire Hathaway

Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the Berkshire Hathaway. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.02 times less risky than Berkshire Hathaway. The stock trades about -0.02 of its potential returns per unit of risk. The Berkshire Hathaway is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  40,992  in Berkshire Hathaway on January 24, 2024 and sell it today you would lose (114.00) from holding Berkshire Hathaway or give up 0.28% of portfolio value over 90 days.

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

Berkshire Hathaway  vs.  Berkshire Hathaway

Berkshire Hathaway

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Berkshire Hathaway

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Berkshire Hathaway and Berkshire Hathaway

The main advantage of trading using opposite Berkshire Hathaway and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway 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 Berkshire Hathaway 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.

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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.