Correlation Between Berkshire Hathaway and ManhattanLimited
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and ManhattanLimited 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 ManhattanLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Manhattan Limited, you can compare the effects of market volatilities on Berkshire Hathaway and ManhattanLimited 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 ManhattanLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and ManhattanLimited.
Diversification Opportunities for Berkshire Hathaway and ManhattanLimited
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and ManhattanLimited is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Manhattan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Limited 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 ManhattanLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Limited has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and ManhattanLimited go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and ManhattanLimited
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.26 times more return on investment than ManhattanLimited. However, Berkshire Hathaway is 3.81 times less risky than ManhattanLimited. It trades about 0.13 of its potential returns per unit of risk. Manhattan Limited is currently generating about -0.3 per unit of risk. If you would invest 68,700,000 in Berkshire Hathaway on August 25, 2024 and sell it today you would earn a total of 2,728,000 from holding Berkshire Hathaway or generate 3.97% 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. Manhattan Limited
Performance |
| Timeline |
| Berkshire Hathaway |
| Manhattan Limited |
Berkshire Hathaway and ManhattanLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and ManhattanLimited
The main advantage of trading using opposite Berkshire Hathaway and ManhattanLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, ManhattanLimited 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 ManhattanLimited will offset losses from the drop in ManhattanLimited'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 |
| ManhattanLimited vs. Clean Air Metals | ManhattanLimited vs. Morningstar Unconstrained Allocation | ManhattanLimited vs. High Yield Municipal Fund | ManhattanLimited vs. Knife River |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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