Correlation Between Berkshire Hathaway and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and NMI Holdings 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 NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and NMI Holdings, you can compare the effects of market volatilities on Berkshire Hathaway and NMI Holdings 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 NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and NMI Holdings.
Diversification Opportunities for Berkshire Hathaway and NMI Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berkshire and NMI is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings 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 NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and NMI Holdings go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and NMI Holdings
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 93.72 times more return on investment than NMI Holdings. However, Berkshire Hathaway is 93.72 times more volatile than NMI Holdings. It trades about 0.19 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.07 per unit of risk. If you would invest 63,100,000 in Berkshire Hathaway on August 29, 2024 and sell it today you would earn a total of 5,450,000 from holding Berkshire Hathaway or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. NMI Holdings
Performance |
| Timeline |
| Berkshire Hathaway |
| NMI Holdings |
Berkshire Hathaway and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and NMI Holdings
The main advantage of trading using opposite Berkshire Hathaway and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Berkshire Hathaway vs. XLMedia PLC | Berkshire Hathaway vs. Nordic Semiconductor ASA | Berkshire Hathaway vs. REMEDY ENTERTAINMENT OYJ | Berkshire Hathaway vs. ZINC MEDIA GR |
| NMI Holdings vs. Boyd Gaming | NMI Holdings vs. SEI INVESTMENTS | NMI Holdings vs. HK Electric Investments | NMI Holdings vs. WisdomTree Investments |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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