Correlation Between Berkshire Hathaway and Travel Leisure
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Travel Leisure 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 Travel Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Travel Leisure Co, you can compare the effects of market volatilities on Berkshire Hathaway and Travel Leisure 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 Travel Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Travel Leisure.
Diversification Opportunities for Berkshire Hathaway and Travel Leisure
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berkshire and Travel is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Travel Leisure Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travel Leisure 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 Travel Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travel Leisure has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Travel Leisure go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Travel Leisure
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.15 times more return on investment than Travel Leisure. However, Berkshire Hathaway is 1.15 times more volatile than Travel Leisure Co. It trades about 0.08 of its potential returns per unit of risk. Travel Leisure Co is currently generating about 0.02 per unit of risk. If you would invest 31,055 in Berkshire Hathaway on November 5, 2024 and sell it today you would earn a total of 16,020 from holding Berkshire Hathaway or generate 51.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Berkshire Hathaway vs. Travel Leisure Co
Performance |
| Timeline |
| Berkshire Hathaway |
| Travel Leisure |
Berkshire Hathaway and Travel Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Travel Leisure
The main advantage of trading using opposite Berkshire Hathaway and Travel Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Travel Leisure 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 Travel Leisure will offset losses from the drop in Travel Leisure's long position.| Berkshire Hathaway vs. DXC Technology Co | Berkshire Hathaway vs. Universal Music Group | Berkshire Hathaway vs. Allianz Technology Trust | Berkshire Hathaway vs. Software Circle plc |
| Travel Leisure vs. Samsung Electronics Co | Travel Leisure vs. Samsung Electronics Co | Travel Leisure vs. Toyota Motor Corp | Travel Leisure vs. Reliance Industries Ltd |
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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