Correlation Between Scandinavian Tobacco and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco and Berkshire Hathaway 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 Scandinavian Tobacco and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Berkshire Hathaway, you can compare the effects of market volatilities on Scandinavian Tobacco and Berkshire Hathaway 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 Scandinavian Tobacco with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Berkshire Hathaway.
Diversification Opportunities for Scandinavian Tobacco and Berkshire Hathaway
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scandinavian and Berkshire is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Scandinavian Tobacco 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 Scandinavian Tobacco Group are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Scandinavian Tobacco i.e., Scandinavian Tobacco and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Berkshire Hathaway
Assuming the 90 days trading horizon Scandinavian Tobacco is expected to generate 77.36 times less return on investment than Berkshire Hathaway. In addition to that, Scandinavian Tobacco is 1.42 times more volatile than Berkshire Hathaway. It trades about 0.0 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.08 per unit of volatility. If you would invest 31,055 in Berkshire Hathaway on October 25, 2024 and sell it today you would earn a total of 15,120 from holding Berkshire Hathaway or generate 48.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Berkshire Hathaway
Performance |
| Timeline |
| Scandinavian Tobacco |
| Berkshire Hathaway |
Scandinavian Tobacco and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Berkshire Hathaway
The main advantage of trading using opposite Scandinavian Tobacco and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Scandinavian Tobacco vs. Berkshire Hathaway | Scandinavian Tobacco vs. Samsung Electronics Co | Scandinavian Tobacco vs. Samsung Electronics Co | Scandinavian Tobacco vs. Chocoladefabriken Lindt Spruengli |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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