Correlation Between Berkshire Hathaway and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and SMA Solar 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 SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and SMA Solar Technology, you can compare the effects of market volatilities on Berkshire Hathaway and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and SMA Solar.
Diversification Opportunities for Berkshire Hathaway and SMA Solar
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and SMA is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and SMA Solar go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and SMA Solar
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.67 times more return on investment than SMA Solar. However, Berkshire Hathaway is 1.48 times less risky than SMA Solar. It trades about 0.1 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.28 per unit of risk. If you would invest 45,550 in Berkshire Hathaway on November 5, 2024 and sell it today you would earn a total of 1,525 from holding Berkshire Hathaway or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. SMA Solar Technology
Performance |
| Timeline |
| Berkshire Hathaway |
| SMA Solar Technology |
Berkshire Hathaway and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and SMA Solar
The main advantage of trading using opposite Berkshire Hathaway and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar'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 |
| SMA Solar vs. Check Point Software | SMA Solar vs. Silvercorp Metals | SMA Solar vs. Beowulf Mining | SMA Solar vs. Sartorius Stedim Biotech |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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