Correlation Between Berkshire Hathaway and Whitbread PLC
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Whitbread PLC 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 Whitbread PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Whitbread PLC, you can compare the effects of market volatilities on Berkshire Hathaway and Whitbread PLC 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 Whitbread PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Whitbread PLC.
Diversification Opportunities for Berkshire Hathaway and Whitbread PLC
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Whitbread is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Whitbread PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitbread 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 Whitbread PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitbread PLC has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Whitbread PLC go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Whitbread PLC
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.42 times more return on investment than Whitbread PLC. However, Berkshire Hathaway is 1.42 times more volatile than Whitbread PLC. It trades about 0.23 of its potential returns per unit of risk. Whitbread PLC is currently generating about -0.28 per unit of risk. If you would invest 45,500 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 2,950 from holding Berkshire Hathaway or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Whitbread PLC
Performance |
| Timeline |
| Berkshire Hathaway |
| Whitbread PLC |
Berkshire Hathaway and Whitbread PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Whitbread PLC
The main advantage of trading using opposite Berkshire Hathaway and Whitbread PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Whitbread PLC 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 Whitbread PLC will offset losses from the drop in Whitbread PLC's long position.| Berkshire Hathaway vs. McEwen Mining | Berkshire Hathaway vs. Allianz Technology Trust | Berkshire Hathaway vs. Cornish Metals | Berkshire Hathaway vs. Sunny Optical Technology |
| Whitbread PLC vs. Viridian Therapeutics | Whitbread PLC vs. CVR Energy | Whitbread PLC vs. Nationwide Building Society | Whitbread PLC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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