Correlation Between Berkshire Hathaway and Ambev SA
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Ambev SA 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 Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Ambev SA, you can compare the effects of market volatilities on Berkshire Hathaway and Ambev SA 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 Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Ambev SA.
Diversification Opportunities for Berkshire Hathaway and Ambev SA
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Ambev is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Ambev SA go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Ambev SA
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.38 times more return on investment than Ambev SA. However, Berkshire Hathaway is 1.38 times more volatile than Ambev SA. It trades about 0.18 of its potential returns per unit of risk. Ambev SA is currently generating about -0.07 per unit of risk. If you would invest 13,116 in Berkshire Hathaway on August 27, 2024 and sell it today you would earn a total of 704.00 from holding Berkshire Hathaway or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Ambev SA
Performance |
| Timeline |
| Berkshire Hathaway |
| Ambev SA |
Berkshire Hathaway and Ambev SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Ambev SA
The main advantage of trading using opposite Berkshire Hathaway and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Ambev SA 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 Ambev SA will offset losses from the drop in Ambev SA's long position.| Berkshire Hathaway vs. New Oriental Education | Berkshire Hathaway vs. American Airlines Group | Berkshire Hathaway vs. Ross Stores | Berkshire Hathaway vs. Spotify Technology SA |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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