Correlation Between Bank of America and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Bank of America 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 of America and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verizon Communications and Berkshire Hathaway, you can compare the effects of market volatilities on Bank of America 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 of America with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Berkshire Hathaway.
Diversification Opportunities for Bank of America and Berkshire Hathaway
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Berkshire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Verizon Communications and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Bank of America 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 Verizon Communications 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 of America i.e., Bank of America and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Bank of America and Berkshire Hathaway
If you would invest 3,575 in Verizon Communications on September 12, 2024 and sell it today you would earn a total of 419.00 from holding Verizon Communications or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Verizon Communications vs. Berkshire Hathaway
Performance |
| Timeline |
| Verizon Communications |
| Berkshire Hathaway |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Berkshire Hathaway
The main advantage of trading using opposite Bank of America and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America 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 of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc | Bank of America vs. Apple Inc |
| Berkshire Hathaway vs. SCANDMEDICAL SOLDK 040 | Berkshire Hathaway vs. Verizon Communications | Berkshire Hathaway vs. Highlight Communications AG | Berkshire Hathaway vs. ONWARD MEDICAL BV |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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