Correlation Between Intel and Berkshire Hathaway

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

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

Diversification Opportunities for Intel and Berkshire Hathaway

-0.52

Correlation Coefficient

Intel  Berkshire Hathaway

Excellent diversification

The 3 months correlation between Intel and Berkshire is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Intel and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Intel 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 Intel 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 Intel i.e., Intel and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Intel and Berkshire Hathaway

Given the investment horizon of 90 days Intel is expected to under-perform the Berkshire Hathaway. In addition to that, Intel is 3.74 times more volatile than Berkshire Hathaway. It trades about -0.29 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about -0.24 per unit of volatility. If you would invest  62,277,700  in Berkshire Hathaway on January 19, 2024 and sell it today you would lose (2,247,700) from holding Berkshire Hathaway or give up 3.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Intel  vs.  Berkshire Hathaway

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 unsteady basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Intel and Berkshire Hathaway

The main advantage of trading using opposite Intel and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.