Correlation Between OTP Bank and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both OTP Bank 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 OTP Bank and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OTP Bank Nyrt and Berkshire Hathaway, you can compare the effects of market volatilities on OTP Bank 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 OTP Bank with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of OTP Bank and Berkshire Hathaway.
Diversification Opportunities for OTP Bank and Berkshire Hathaway
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between OTP and Berkshire is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding OTP Bank Nyrt and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and OTP Bank 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 OTP Bank Nyrt 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 OTP Bank i.e., OTP Bank and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between OTP Bank and Berkshire Hathaway
Assuming the 90 days trading horizon OTP Bank Nyrt is expected to generate 19.3 times more return on investment than Berkshire Hathaway. However, OTP Bank is 19.3 times more volatile than Berkshire Hathaway. It trades about 0.1 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.23 per unit of risk. If you would invest 1,259,000 in OTP Bank Nyrt on September 1, 2024 and sell it today you would earn a total of 0.00 from holding OTP Bank Nyrt or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
OTP Bank Nyrt vs. Berkshire Hathaway
Performance |
| Timeline |
| OTP Bank Nyrt |
| Berkshire Hathaway |
OTP Bank and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OTP Bank and Berkshire Hathaway
The main advantage of trading using opposite OTP Bank and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OTP Bank 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.| OTP Bank vs. Infrastrutture Wireless Italiane | OTP Bank vs. Datalogic | OTP Bank vs. Bloomsbury Publishing Plc | OTP Bank vs. Charter Communications Cl |
| Berkshire Hathaway vs. McEwen Mining | Berkshire Hathaway vs. Allianz Technology Trust | Berkshire Hathaway vs. Cornish Metals | Berkshire Hathaway vs. Sunny Optical Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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