Correlation Between Berkshire Hathaway and Lloyds Banking
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Lloyds Banking 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 Lloyds Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Lloyds Banking Group, you can compare the effects of market volatilities on Berkshire Hathaway and Lloyds Banking 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 Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Lloyds Banking.
Diversification Opportunities for Berkshire Hathaway and Lloyds Banking
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Lloyds is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group 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 Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Lloyds Banking go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Lloyds Banking
Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the Lloyds Banking. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.13 times less risky than Lloyds Banking. The stock trades about -0.25 of its potential returns per unit of risk. The Lloyds Banking Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,342 in Lloyds Banking Group on September 27, 2024 and sell it today you would earn a total of 80.00 from holding Lloyds Banking Group or generate 1.5% 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. Lloyds Banking Group
Performance |
| Timeline |
| Berkshire Hathaway |
| Lloyds Banking Group |
Berkshire Hathaway and Lloyds Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Lloyds Banking
The main advantage of trading using opposite Berkshire Hathaway and Lloyds Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Lloyds Banking 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 Lloyds Banking will offset losses from the drop in Lloyds Banking's long position.| Berkshire Hathaway vs. Samsung Electronics Co | Berkshire Hathaway vs. Samsung Electronics Co | Berkshire Hathaway vs. Hyundai Motor | Berkshire Hathaway vs. Toyota Motor Corp |
| Lloyds Banking vs. Berkshire Hathaway | Lloyds Banking vs. Hyundai Motor | Lloyds Banking vs. Samsung Electronics Co | Lloyds Banking vs. Samsung Electronics Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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