Correlation Between AXA SA and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both AXA SA 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 AXA SA and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA SA and Berkshire Hathaway, you can compare the effects of market volatilities on AXA SA 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 AXA SA with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Berkshire Hathaway.
Diversification Opportunities for AXA SA and Berkshire Hathaway
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AXA and Berkshire is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and AXA SA 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 AXA SA 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 AXA SA i.e., AXA SA and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between AXA SA and Berkshire Hathaway
Assuming the 90 days horizon AXA SA is expected to generate 2.17 times more return on investment than Berkshire Hathaway. However, AXA SA is 2.17 times more volatile than Berkshire Hathaway. It trades about -0.02 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about -0.16 per unit of risk. If you would invest 3,673 in AXA SA on October 11, 2024 and sell it today you would lose (26.00) from holding AXA SA or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
AXA SA vs. Berkshire Hathaway
Performance |
| Timeline |
| AXA SA |
| Berkshire Hathaway |
AXA SA and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXA SA and Berkshire Hathaway
The main advantage of trading using opposite AXA SA and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA 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.| AXA SA vs. Assicurazioni Generali SpA | AXA SA vs. Athene Holding | AXA SA vs. Athene Holding | AXA SA vs. Arch Capital Group |
| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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