Correlation Between SoftBank Group and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both SoftBank Group 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 SoftBank Group and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Berkshire Hathaway, you can compare the effects of market volatilities on SoftBank Group 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 SoftBank Group with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Berkshire Hathaway.
Diversification Opportunities for SoftBank Group and Berkshire Hathaway
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SoftBank and Berkshire is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and SoftBank Group 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 SoftBank Group Corp 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 SoftBank Group i.e., SoftBank Group and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between SoftBank Group and Berkshire Hathaway
Assuming the 90 days trading horizon SoftBank Group Corp is expected to under-perform the Berkshire Hathaway. In addition to that, SoftBank Group is 1.87 times more volatile than Berkshire Hathaway. It trades about -0.19 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.23 per unit of volatility. If you would invest 45,500 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 2,950 from holding Berkshire Hathaway or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 73.91% |
| Values | Daily Returns |
SoftBank Group Corp vs. Berkshire Hathaway
Performance |
| Timeline |
| SoftBank Group Corp |
| Berkshire Hathaway |
SoftBank Group and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Berkshire Hathaway
The main advantage of trading using opposite SoftBank Group and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group 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.| SoftBank Group vs. Blackrock World Mining | SoftBank Group vs. Batm Advanced Communications | SoftBank Group vs. GoldMining | SoftBank Group vs. Gamma Communications PLC |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |