Correlation Between Berkshire Hathaway and Various Eateries
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Various Eateries 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 Various Eateries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Various Eateries PLC, you can compare the effects of market volatilities on Berkshire Hathaway and Various Eateries 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 Various Eateries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Various Eateries.
Diversification Opportunities for Berkshire Hathaway and Various Eateries
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Various is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Various Eateries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Various Eateries 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 Various Eateries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Various Eateries PLC has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Various Eateries go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Various Eateries
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.43 times more return on investment than Various Eateries. However, Berkshire Hathaway is 1.43 times more volatile than Various Eateries PLC. It trades about 0.13 of its potential returns per unit of risk. Various Eateries PLC is currently generating about -0.16 per unit of risk. If you would invest 40,775 in Berkshire Hathaway on September 2, 2024 and sell it today you would earn a total of 7,675 from holding Berkshire Hathaway or generate 18.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Various Eateries PLC
Performance |
| Timeline |
| Berkshire Hathaway |
| Various Eateries PLC |
Berkshire Hathaway and Various Eateries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Various Eateries
The main advantage of trading using opposite Berkshire Hathaway and Various Eateries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Various Eateries 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 Various Eateries will offset losses from the drop in Various Eateries' 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 |
| Various Eateries vs. Viridian Therapeutics | Various Eateries vs. CVR Energy | Various Eateries vs. Nationwide Building Society | Various Eateries vs. Dollar Tree |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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