Correlation Between Berkshire Hathaway and Ebro Foods
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Ebro Foods 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 Ebro Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Ebro Foods, you can compare the effects of market volatilities on Berkshire Hathaway and Ebro Foods 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 Ebro Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Ebro Foods.
Diversification Opportunities for Berkshire Hathaway and Ebro Foods
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berkshire and Ebro is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Ebro Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebro Foods 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 Ebro Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebro Foods has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Ebro Foods go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Ebro Foods
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 2.14 times more return on investment than Ebro Foods. However, Berkshire Hathaway is 2.14 times more volatile than Ebro Foods. It trades about 0.15 of its potential returns per unit of risk. Ebro Foods is currently generating about -0.03 per unit of risk. If you would invest 45,250 in Berkshire Hathaway on October 20, 2024 and sell it today you would earn a total of 1,575 from holding Berkshire Hathaway or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Ebro Foods
Performance |
| Timeline |
| Berkshire Hathaway |
| Ebro Foods |
Berkshire Hathaway and Ebro Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Ebro Foods
The main advantage of trading using opposite Berkshire Hathaway and Ebro Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Ebro Foods 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 Ebro Foods will offset losses from the drop in Ebro Foods' long position.| Berkshire Hathaway vs. Ebro Foods | Berkshire Hathaway vs. Edita Food Industries | Berkshire Hathaway vs. Fresenius Medical Care | Berkshire Hathaway vs. Associated British Foods |
| Ebro Foods vs. Xeros Technology Group | Ebro Foods vs. Alfa Financial Software | Ebro Foods vs. Axway Software SA | Ebro Foods vs. Taiwan Semiconductor Manufacturing |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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