Correlation Between Berkshire Hathaway and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and DFS Furniture 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 DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and DFS Furniture PLC, you can compare the effects of market volatilities on Berkshire Hathaway and DFS Furniture 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 DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and DFS Furniture.
Diversification Opportunities for Berkshire Hathaway and DFS Furniture
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Berkshire and DFS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and DFS Furniture go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and DFS Furniture
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.53 times more return on investment than DFS Furniture. However, Berkshire Hathaway is 1.89 times less risky than DFS Furniture. It trades about 0.12 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.06 per unit of risk. If you would invest 35,225 in Berkshire Hathaway on September 2, 2024 and sell it today you would earn a total of 13,225 from holding Berkshire Hathaway or generate 37.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. DFS Furniture PLC
Performance |
| Timeline |
| Berkshire Hathaway |
| DFS Furniture PLC |
Berkshire Hathaway and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and DFS Furniture
The main advantage of trading using opposite Berkshire Hathaway and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Berkshire Hathaway vs. Zegona Communications Plc | Berkshire Hathaway vs. Oakley Capital Investments | Berkshire Hathaway vs. Aberdeen Diversified Income | Berkshire Hathaway vs. Monks Investment Trust |
| DFS Furniture vs. Infrastrutture Wireless Italiane | DFS Furniture vs. Odfjell Drilling | DFS Furniture vs. FC Investment Trust | DFS Furniture vs. Schroders Investment Trusts |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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