Correlation Between Leucadia National and Berkshire Hathaway

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

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

Diversification Opportunities for Leucadia National and Berkshire Hathaway

0.0

Correlation Coefficient

Leucadia National  Berkshire Hathaway

Pay attention - limited upside

The 3 months correlation between Leucadia and Berkshire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Leucadia National and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Leucadia National 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 Leucadia National 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 Leucadia National i.e., Leucadia National and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Leucadia National and Berkshire Hathaway

If you would invest (100.00) in Leucadia National on January 25, 2024 and sell it today you would earn a total of  100.00  from holding Leucadia National or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Leucadia National  vs.  Berkshire Hathaway

Leucadia National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leucadia National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Leucadia National is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Berkshire Hathaway

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Leucadia National and Berkshire Hathaway

The main advantage of trading using opposite Leucadia National and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leucadia National 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 Leucadia National 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.