Correlation Between Bankers Investment and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Bankers Investment 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 Bankers Investment and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bankers Investment Trust and Berkshire Hathaway, you can compare the effects of market volatilities on Bankers Investment 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 Bankers Investment with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bankers Investment and Berkshire Hathaway.
Diversification Opportunities for Bankers Investment and Berkshire Hathaway
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bankers and Berkshire is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Bankers Investment 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 Bankers Investment Trust 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 Bankers Investment i.e., Bankers Investment and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Bankers Investment and Berkshire Hathaway
Assuming the 90 days trading horizon Bankers Investment Trust is expected to generate 0.61 times more return on investment than Berkshire Hathaway. However, Bankers Investment Trust is 1.63 times less risky than Berkshire Hathaway. It trades about 0.37 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.09 per unit of risk. If you would invest 11,577 in Bankers Investment Trust on November 8, 2024 and sell it today you would earn a total of 1,063 from holding Bankers Investment Trust or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bankers Investment Trust vs. Berkshire Hathaway
Performance |
| Timeline |
| Bankers Investment Trust |
| Berkshire Hathaway |
Bankers Investment and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bankers Investment and Berkshire Hathaway
The main advantage of trading using opposite Bankers Investment and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bankers Investment 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.| Bankers Investment vs. Cairo Communication SpA | Bankers Investment vs. Universal Display Corp | Bankers Investment vs. Spirent Communications plc | Bankers Investment vs. mobilezone holding AG |
| Berkshire Hathaway vs. Worldwide Healthcare Trust | Berkshire Hathaway vs. UNIQA Insurance Group | Berkshire Hathaway vs. Roebuck Food Group | Berkshire Hathaway vs. Induction Healthcare Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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