Correlation Between Berkshire Hathaway and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Alaska Air 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 Berkshire Hathaway and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Alaska Air Group, you can compare the effects of market volatilities on Berkshire Hathaway and Alaska Air 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 Berkshire Hathaway with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Alaska Air.
Diversification Opportunities for Berkshire Hathaway and Alaska Air
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Alaska is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Alaska Air go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Alaska Air
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 3.92 times less return on investment than Alaska Air. But when comparing it to its historical volatility, Berkshire Hathaway is 1.28 times less risky than Alaska Air. It trades about 0.03 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 6,721 in Alaska Air Group on October 26, 2024 and sell it today you would earn a total of 211.00 from holding Alaska Air Group or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Alaska Air Group
Performance |
| Timeline |
| Berkshire Hathaway |
| Alaska Air Group |
Berkshire Hathaway and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Alaska Air
The main advantage of trading using opposite Berkshire Hathaway and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| Berkshire Hathaway vs. Rheinmetall AG | Berkshire Hathaway vs. PPHE Hotel Group | Berkshire Hathaway vs. First Class Metals | Berkshire Hathaway vs. Jacquet Metal Service |
| Alaska Air vs. Berkshire Hathaway | Alaska Air vs. Samsung Electronics Co | Alaska Air vs. Samsung Electronics Co | Alaska Air vs. Chocoladefabriken Lindt Spruengli |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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