Correlation Between Berkshire Hathaway and Equitable Holdings
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Equitable 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 Equitable 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 Equitable Holdings, you can compare the effects of market volatilities on Berkshire Hathaway and Equitable 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 Equitable Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Equitable Holdings.
Diversification Opportunities for Berkshire Hathaway and Equitable Holdings
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Equitable is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Equitable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable 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 Equitable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Holdings has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Equitable Holdings go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Equitable Holdings
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.79 times more return on investment than Equitable Holdings. However, Berkshire Hathaway is 1.27 times less risky than Equitable Holdings. It trades about 0.09 of its potential returns per unit of risk. Equitable Holdings is currently generating about 0.03 per unit of risk. If you would invest 46,870,000 in Berkshire Hathaway on August 24, 2024 and sell it today you would earn a total of 24,558,000 from holding Berkshire Hathaway or generate 52.4% 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. Equitable Holdings
Performance |
| Timeline |
| Berkshire Hathaway |
| Equitable Holdings |
Berkshire Hathaway and Equitable Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Equitable Holdings
The main advantage of trading using opposite Berkshire Hathaway and Equitable Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Equitable 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 Equitable Holdings will offset losses from the drop in Equitable Holdings' 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 |
| Equitable Holdings vs. Enstar Group Limited | Equitable Holdings vs. Berkshire Hathaway | Equitable Holdings vs. Athene Holding | Equitable Holdings vs. Athene Holding |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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