Correlation Between Fresenius Medical and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Fresenius Medical 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 Fresenius Medical and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fresenius Medical Care and Berkshire Hathaway, you can compare the effects of market volatilities on Fresenius Medical 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 Fresenius Medical with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fresenius Medical and Berkshire Hathaway.
Diversification Opportunities for Fresenius Medical and Berkshire Hathaway
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fresenius and Berkshire is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fresenius Medical Care and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Fresenius Medical 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 Fresenius Medical Care 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 Fresenius Medical i.e., Fresenius Medical and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Fresenius Medical and Berkshire Hathaway
Assuming the 90 days trading horizon Fresenius Medical is expected to generate 1.63 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Fresenius Medical Care is 1.23 times less risky than Berkshire Hathaway. It trades about 0.12 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 45,250 in Berkshire Hathaway on October 20, 2024 and sell it today you would earn a total of 1,575 from holding Berkshire Hathaway or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fresenius Medical Care vs. Berkshire Hathaway
Performance |
| Timeline |
| Fresenius Medical Care |
| Berkshire Hathaway |
Fresenius Medical and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fresenius Medical and Berkshire Hathaway
The main advantage of trading using opposite Fresenius Medical and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fresenius Medical 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.| Fresenius Medical vs. Cornish Metals | Fresenius Medical vs. Southwest Airlines Co | Fresenius Medical vs. Synthomer plc | Fresenius Medical vs. DFS Furniture PLC |
| Berkshire Hathaway vs. Ebro Foods | Berkshire Hathaway vs. Edita Food Industries | Berkshire Hathaway vs. Fresenius Medical Care | Berkshire Hathaway vs. Associated British Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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