Correlation Between Berkshire Hathaway and Ashtead Group
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Ashtead Group 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 Ashtead Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Ashtead Group plc, you can compare the effects of market volatilities on Berkshire Hathaway and Ashtead Group 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 Ashtead Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Ashtead Group.
Diversification Opportunities for Berkshire Hathaway and Ashtead Group
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and Ashtead is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Ashtead Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Group plc 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 Ashtead Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Group plc has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Ashtead Group go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Ashtead Group
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 1.0 times more return on investment than Ashtead Group. However, Berkshire Hathaway is as risky as Ashtead Group. It trades about 0.22 of its potential returns per unit of risk. Ashtead Group plc is currently generating about 0.15 per unit of risk. If you would invest 63,100,000 in Berkshire Hathaway on August 27, 2024 and sell it today you would earn a total of 5,250,000 from holding Berkshire Hathaway or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Ashtead Group plc
Performance |
| Timeline |
| Berkshire Hathaway |
| Ashtead Group plc |
Berkshire Hathaway and Ashtead Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Ashtead Group
The main advantage of trading using opposite Berkshire Hathaway and Ashtead Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Ashtead Group 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 Ashtead Group will offset losses from the drop in Ashtead Group's long position.| Berkshire Hathaway vs. Liberty Broadband | Berkshire Hathaway vs. Coeur Mining | Berkshire Hathaway vs. BROADSTNET LEADL 00025 | Berkshire Hathaway vs. Zijin Mining Group |
| Ashtead Group vs. CN MODERN DAIRY | Ashtead Group vs. SENECA FOODS A | Ashtead Group vs. TreeHouse Foods | Ashtead Group vs. MIRAMAR HOTEL INV |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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