Correlation Between Berkshire Hathaway and RenaissanceRe Holdings
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and RenaissanceRe 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 RenaissanceRe 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 RenaissanceRe Holdings, you can compare the effects of market volatilities on Berkshire Hathaway and RenaissanceRe 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 RenaissanceRe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and RenaissanceRe Holdings.
Diversification Opportunities for Berkshire Hathaway and RenaissanceRe Holdings
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and RenaissanceRe is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and RenaissanceRe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RenaissanceRe 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 RenaissanceRe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RenaissanceRe Holdings has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and RenaissanceRe Holdings go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and RenaissanceRe Holdings
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 81.99 times more return on investment than RenaissanceRe Holdings. However, Berkshire Hathaway is 81.99 times more volatile than RenaissanceRe Holdings. It trades about 0.14 of its potential returns per unit of risk. RenaissanceRe Holdings is currently generating about -0.07 per unit of risk. If you would invest 63,900,000 in Berkshire Hathaway on September 23, 2024 and sell it today you would earn a total of 850,000 from holding Berkshire Hathaway or generate 1.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. RenaissanceRe Holdings
Performance |
| Timeline |
| Berkshire Hathaway |
| RenaissanceRe Holdings |
Berkshire Hathaway and RenaissanceRe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and RenaissanceRe Holdings
The main advantage of trading using opposite Berkshire Hathaway and RenaissanceRe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, RenaissanceRe 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 RenaissanceRe Holdings will offset losses from the drop in RenaissanceRe Holdings' long position.| Berkshire Hathaway vs. Berkshire Hathaway | Berkshire Hathaway vs. Zurich Insurance Group | Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Assicurazioni Generali SpA |
| RenaissanceRe Holdings vs. MUENCHRUECKUNSADR 110 | RenaissanceRe Holdings vs. Swiss Re AG | RenaissanceRe Holdings vs. HANNRUECKVSE ADR 12ON | RenaissanceRe Holdings vs. Everest 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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