Correlation Between Technicolor and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Technicolor 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 Technicolor and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technicolor and Berkshire Hathaway, you can compare the effects of market volatilities on Technicolor 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 Technicolor with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technicolor and Berkshire Hathaway.
Diversification Opportunities for Technicolor and Berkshire Hathaway
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Technicolor and Berkshire is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Technicolor and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Technicolor 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 Technicolor 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 Technicolor i.e., Technicolor and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Technicolor and Berkshire Hathaway
Assuming the 90 days trading horizon Technicolor is expected to generate 1.2 times less return on investment than Berkshire Hathaway. In addition to that, Technicolor is 1.95 times more volatile than Berkshire Hathaway. It trades about 0.01 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.03 per unit of volatility. If you would invest 45,875 in Berkshire Hathaway on October 28, 2024 and sell it today you would earn a total of 275.00 from holding Berkshire Hathaway or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technicolor vs. Berkshire Hathaway
Performance |
| Timeline |
| Technicolor |
| Berkshire Hathaway |
Technicolor and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technicolor and Berkshire Hathaway
The main advantage of trading using opposite Technicolor and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technicolor 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.| Technicolor vs. Berkshire Hathaway | Technicolor vs. Samsung Electronics Co | Technicolor vs. Samsung Electronics Co | Technicolor vs. Chocoladefabriken Lindt Spruengli |
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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 the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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