Correlation Between Berkshire Hathaway and Macfarlane Group
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Macfarlane Group 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 Macfarlane Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Macfarlane Group PLC, you can compare the effects of market volatilities on Berkshire Hathaway and Macfarlane Group 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 Macfarlane Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Macfarlane Group.
Diversification Opportunities for Berkshire Hathaway and Macfarlane Group
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Macfarlane is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Macfarlane Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macfarlane Group 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 Macfarlane Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macfarlane Group PLC has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Macfarlane Group go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Macfarlane Group
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.71 times more return on investment than Macfarlane Group. However, Berkshire Hathaway is 1.41 times less risky than Macfarlane Group. It trades about 0.13 of its potential returns per unit of risk. Macfarlane Group PLC is currently generating about -0.06 per unit of risk. If you would invest 40,950 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 7,750 from holding Berkshire Hathaway or generate 18.93% 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. Macfarlane Group PLC
Performance |
| Timeline |
| Berkshire Hathaway |
| Macfarlane Group PLC |
Berkshire Hathaway and Macfarlane Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Macfarlane Group
The main advantage of trading using opposite Berkshire Hathaway and Macfarlane Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Macfarlane Group 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 Macfarlane Group will offset losses from the drop in Macfarlane Group's long position.| Berkshire Hathaway vs. Qurate Retail Series | Berkshire Hathaway vs. Blackrock World Mining | Berkshire Hathaway vs. Anglo Asian Mining | Berkshire Hathaway vs. Hochschild Mining plc |
| Macfarlane Group vs. Berkshire Hathaway | Macfarlane Group vs. Chocoladefabriken Lindt Spruengli | Macfarlane Group vs. Rockwood Realisation PLC | Macfarlane Group vs. Toyota Motor Corp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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