Correlation Between Berkshire Hathaway and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Orsted A/S 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 Orsted A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Orsted AS ADR, you can compare the effects of market volatilities on Berkshire Hathaway and Orsted A/S 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 Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Orsted A/S.
Diversification Opportunities for Berkshire Hathaway and Orsted A/S
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Orsted is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Orsted AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS ADR 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 Orsted A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS ADR has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Orsted A/S go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Orsted A/S
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.4 times more return on investment than Orsted A/S. However, Berkshire Hathaway is 2.5 times less risky than Orsted A/S. It trades about 0.08 of its potential returns per unit of risk. Orsted AS ADR is currently generating about -0.16 per unit of risk. If you would invest 69,122,000 in Berkshire Hathaway on August 24, 2024 and sell it today you would earn a total of 1,603,000 from holding Berkshire Hathaway or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Berkshire Hathaway vs. Orsted AS ADR
Performance |
| Timeline |
| Berkshire Hathaway |
| Orsted AS ADR |
Berkshire Hathaway and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Orsted A/S
The main advantage of trading using opposite Berkshire Hathaway and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Orsted A/S 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 Orsted A/S will offset losses from the drop in Orsted A/S's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
| Orsted A/S vs. Brookfield Renewable Partners | Orsted A/S vs. Brookfield Renewable Corp | Orsted A/S vs. Clearway Energy Class | Orsted A/S vs. Atlantica Sustainable Infrastructure |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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