Correlation Between Berkshire Hathaway and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and UnitedHealth Group 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 UnitedHealth Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Berkshire Hathaway and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and UnitedHealth Group.
Diversification Opportunities for Berkshire Hathaway and UnitedHealth Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and UnitedHealth is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and UnitedHealth Group
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.57 times more return on investment than UnitedHealth Group. However, Berkshire Hathaway is 1.76 times less risky than UnitedHealth Group. It trades about 0.1 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about 0.02 per unit of risk. If you would invest 55,118,200 in Berkshire Hathaway on September 12, 2024 and sell it today you would earn a total of 14,343,800 from holding Berkshire Hathaway or generate 26.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Berkshire Hathaway vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Berkshire Hathaway |
| UnitedHealth Group |
Berkshire Hathaway and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and UnitedHealth Group
The main advantage of trading using opposite Berkshire Hathaway and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group'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 |
| UnitedHealth Group vs. Cigna Corp | UnitedHealth Group vs. Humana Inc | UnitedHealth Group vs. Elevance Health | UnitedHealth Group vs. Centene Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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