Correlation Between Host Hotels and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Host Hotels 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 Host Hotels and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Host Hotels Resorts and Berkshire Hathaway, you can compare the effects of market volatilities on Host Hotels 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 Host Hotels with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Host Hotels and Berkshire Hathaway.
Diversification Opportunities for Host Hotels and Berkshire Hathaway
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Host and Berkshire is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Host Hotels Resorts and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Host Hotels 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 Host Hotels Resorts 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 Host Hotels i.e., Host Hotels and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Host Hotels and Berkshire Hathaway
Assuming the 90 days trading horizon Host Hotels is expected to generate 1.83 times less return on investment than Berkshire Hathaway. In addition to that, Host Hotels is 1.27 times more volatile than Berkshire Hathaway. It trades about 0.04 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.08 per unit of volatility. If you would invest 36,500 in Berkshire Hathaway on September 14, 2024 and sell it today you would earn a total of 9,600 from holding Berkshire Hathaway or generate 26.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Host Hotels Resorts vs. Berkshire Hathaway
Performance |
| Timeline |
| Host Hotels Resorts |
| Berkshire Hathaway |
Host Hotels and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Host Hotels and Berkshire Hathaway
The main advantage of trading using opposite Host Hotels and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Host Hotels 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.| Host Hotels vs. iShares Physical Silver | Host Hotels vs. Zoom Video Communications | Host Hotels vs. Endeavour Mining Corp | Host Hotels vs. GoldMining |
| Berkshire Hathaway vs. Celebrus Technologies plc | Berkshire Hathaway vs. DXC Technology Co | Berkshire Hathaway vs. L3Harris Technologies | Berkshire Hathaway vs. Host Hotels Resorts |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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