Correlation Between Berkshire Focus and White Oak
Can any of the company-specific risk be diversified away by investing in both Berkshire Focus and White Oak 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 Focus and White Oak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Focus and White Oak Select, you can compare the effects of market volatilities on Berkshire Focus and White Oak 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 Focus with a short position of White Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Focus and White Oak.
Diversification Opportunities for Berkshire Focus and White Oak
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Berkshire and White is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Focus and White Oak Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White Oak Select and Berkshire Focus 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 Focus are associated (or correlated) with White Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White Oak Select has no effect on the direction of Berkshire Focus i.e., Berkshire Focus and White Oak go up and down completely randomly.
Pair Corralation between Berkshire Focus and White Oak
Assuming the 90 days horizon Berkshire Focus is expected to generate 2.38 times more return on investment than White Oak. However, Berkshire Focus is 2.38 times more volatile than White Oak Select. It trades about 0.34 of its potential returns per unit of risk. White Oak Select is currently generating about 0.07 per unit of risk. If you would invest 2,698 in Berkshire Focus on August 27, 2024 and sell it today you would earn a total of 433.00 from holding Berkshire Focus or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Focus vs. White Oak Select
Performance |
| Timeline |
| Berkshire Focus |
| White Oak Select |
Berkshire Focus and White Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Focus and White Oak
The main advantage of trading using opposite Berkshire Focus and White Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Focus position performs unexpectedly, White Oak 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 White Oak will offset losses from the drop in White Oak's long position.| Berkshire Focus vs. Red Oak Technology | Berkshire Focus vs. Firsthand Technology Opportunities | Berkshire Focus vs. Morgan Stanley Multi | Berkshire Focus vs. Internet Ultrasector Profund |
| White Oak vs. Red Oak Technology | White Oak vs. Pin Oak Equity | White Oak vs. Black Oak Emerging | White Oak vs. Victory Rs Small |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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