Correlation Between Berkshire Hathaway and Companhia
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Companhia 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 Companhia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Companhia de Saneamento, you can compare the effects of market volatilities on Berkshire Hathaway and Companhia 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 Companhia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Companhia.
Diversification Opportunities for Berkshire Hathaway and Companhia
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Companhia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Companhia de Saneamento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia de Saneamento 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 Companhia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia de Saneamento has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Companhia go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Companhia
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.95 times more return on investment than Companhia. However, Berkshire Hathaway is 1.05 times less risky than Companhia. It trades about 0.26 of its potential returns per unit of risk. Companhia de Saneamento is currently generating about 0.06 per unit of risk. If you would invest 13,133 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 1,182 from holding Berkshire Hathaway or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Companhia de Saneamento
Performance |
| Timeline |
| Berkshire Hathaway |
| Companhia de Saneamento |
Berkshire Hathaway and Companhia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Companhia
The main advantage of trading using opposite Berkshire Hathaway and Companhia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Companhia 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 Companhia will offset losses from the drop in Companhia's long position.| Berkshire Hathaway vs. Bemobi Mobile Tech | Berkshire Hathaway vs. United Rentals | Berkshire Hathaway vs. Verizon Communications | Berkshire Hathaway vs. Electronic Arts |
| Companhia vs. CTEEP Companhia | Companhia vs. BB Seguridade Participacoes | Companhia vs. Transmissora Aliana de | Companhia vs. Itasa Investimentos |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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