Correlation Between BANK HANDLOWY and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both BANK HANDLOWY 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 BANK HANDLOWY and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK HANDLOWY and Berkshire Hathaway, you can compare the effects of market volatilities on BANK HANDLOWY 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 BANK HANDLOWY with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK HANDLOWY and Berkshire Hathaway.
Diversification Opportunities for BANK HANDLOWY and Berkshire Hathaway
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and Berkshire is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY i.e., BANK HANDLOWY and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between BANK HANDLOWY and Berkshire Hathaway
Assuming the 90 days trading horizon BANK HANDLOWY is expected to under-perform the Berkshire Hathaway. But the stock apears to be less risky and, when comparing its historical volatility, BANK HANDLOWY is 4.18 times less risky than Berkshire Hathaway. The stock trades about -0.36 of its potential returns per unit of risk. The Berkshire Hathaway is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 40,610 in Berkshire Hathaway on September 4, 2024 and sell it today you would earn a total of 4,825 from holding Berkshire Hathaway or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
BANK HANDLOWY vs. Berkshire Hathaway
Performance |
| Timeline |
| BANK HANDLOWY |
| Berkshire Hathaway |
BANK HANDLOWY and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK HANDLOWY and Berkshire Hathaway
The main advantage of trading using opposite BANK HANDLOWY and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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.| BANK HANDLOWY vs. LION ONE METALS | BANK HANDLOWY vs. Gamma Communications plc | BANK HANDLOWY vs. Computer And Technologies | BANK HANDLOWY vs. COMPUTERSHARE |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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