Correlation Between Marcus and Berkshire Hathaway

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Can any of the company-specific risk be diversified away by investing in both Marcus 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 Marcus and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marcus and Berkshire Hathaway, you can compare the effects of market volatilities on Marcus 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 Marcus with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marcus and Berkshire Hathaway.

Diversification Opportunities for Marcus and Berkshire Hathaway

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Marcus and Berkshire is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Marcus 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 Marcus 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 Marcus i.e., Marcus and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Marcus and Berkshire Hathaway

Considering the 90-day investment horizon Marcus is expected to generate 1.49 times more return on investment than Berkshire Hathaway. However, Marcus is 1.49 times more volatile than Berkshire Hathaway. It trades about 0.22 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.12 per unit of risk. If you would invest  1,388  in Marcus on October 29, 2022 and sell it today you would earn a total of  101.00  from holding Marcus or generate 7.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Marcus  vs.  Berkshire Hathaway

 Performance (%) 
       Timeline  
Marcus 
Marcus Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Marcus is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Marcus Price Channel

Berkshire Hathaway 
Berkshire Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Berkshire Price Channel

Marcus and Berkshire Hathaway Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Marcus and Berkshire Hathaway

The main advantage of trading using opposite Marcus and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marcus 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.
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The idea behind Marcus 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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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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