Correlation Between Berkshire Hathaway and United Utilities
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and United Utilities 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 United Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and United Utilities Group, you can compare the effects of market volatilities on Berkshire Hathaway and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and United Utilities.
Diversification Opportunities for Berkshire Hathaway and United Utilities
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and United is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and United Utilities go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and United Utilities
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.71 times more return on investment than United Utilities. However, Berkshire Hathaway is 1.41 times less risky than United Utilities. It trades about 0.12 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.07 per unit of risk. If you would invest 56,100,000 in Berkshire Hathaway on August 26, 2024 and sell it today you would earn a total of 12,250,000 from holding Berkshire Hathaway or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. United Utilities Group
Performance |
| Timeline |
| Berkshire Hathaway |
| United Utilities |
Berkshire Hathaway and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and United Utilities
The main advantage of trading using opposite Berkshire Hathaway and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Berkshire Hathaway vs. Flutter Entertainment PLC | Berkshire Hathaway vs. Mitsui Chemicals | Berkshire Hathaway vs. Live Nation Entertainment | Berkshire Hathaway vs. Media and Games |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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