Correlation Between Berkshire Hathaway and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Ameren Corp 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 Ameren Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Ameren Corp, you can compare the effects of market volatilities on Berkshire Hathaway and Ameren Corp 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 Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Ameren Corp.
Diversification Opportunities for Berkshire Hathaway and Ameren Corp
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Ameren is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp 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 Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Ameren Corp go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Ameren Corp
Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the Ameren Corp. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.11 times less risky than Ameren Corp. The stock trades about -0.08 of its potential returns per unit of risk. The Ameren Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,268 in Ameren Corp on October 26, 2024 and sell it today you would earn a total of 79.00 from holding Ameren Corp or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.12% |
| Values | Daily Returns |
Berkshire Hathaway vs. Ameren Corp
Performance |
| Timeline |
| Berkshire Hathaway |
| Ameren Corp |
Berkshire Hathaway and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Ameren Corp
The main advantage of trading using opposite Berkshire Hathaway and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Ameren Corp 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 Ameren Corp will offset losses from the drop in Ameren Corp'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 |
| Ameren Corp vs. Berkshire Hathaway | Ameren Corp vs. Samsung Electronics Co | Ameren Corp vs. Samsung Electronics Co | Ameren Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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