Correlation Between Berkshire Hathaway and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Zurich Insurance 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 Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Zurich Insurance Group, you can compare the effects of market volatilities on Berkshire Hathaway and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Zurich Insurance.
Diversification Opportunities for Berkshire Hathaway and Zurich Insurance
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Zurich is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Zurich Insurance go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Zurich Insurance
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.64 times more return on investment than Zurich Insurance. However, Berkshire Hathaway is 1.55 times less risky than Zurich Insurance. It trades about 0.14 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.08 per unit of risk. If you would invest 60,950,000 in Berkshire Hathaway on August 25, 2024 and sell it today you would earn a total of 5,500,000 from holding Berkshire Hathaway or generate 9.02% 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. Zurich Insurance Group
Performance |
| Timeline |
| Berkshire Hathaway |
| Zurich Insurance |
Berkshire Hathaway and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Zurich Insurance
The main advantage of trading using opposite Berkshire Hathaway and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.| Berkshire Hathaway vs. Zurich Insurance Group | Berkshire Hathaway vs. Superior Plus Corp | Berkshire Hathaway vs. NMI Holdings | Berkshire Hathaway vs. Origin Agritech |
| Zurich Insurance vs. Perseus Mining Limited | Zurich Insurance vs. INDOFOOD AGRI RES | Zurich Insurance vs. Performance Food Group | Zurich Insurance vs. TYSON FOODS A |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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