Correlation Between Berkshire Hathaway and Invesco Municipal
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Invesco Municipal 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 Invesco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Invesco Municipal Trust, you can compare the effects of market volatilities on Berkshire Hathaway and Invesco Municipal 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 Invesco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Invesco Municipal.
Diversification Opportunities for Berkshire Hathaway and Invesco Municipal
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Invesco is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Invesco Municipal Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Municipal Trust 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 Invesco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Municipal Trust has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Invesco Municipal go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Invesco Municipal
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 2.46 times more return on investment than Invesco Municipal. However, Berkshire Hathaway is 2.46 times more volatile than Invesco Municipal Trust. It trades about 0.08 of its potential returns per unit of risk. Invesco Municipal Trust is currently generating about -0.01 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Invesco Municipal Trust
Performance |
| Timeline |
| Berkshire Hathaway |
| Invesco Municipal Trust |
Berkshire Hathaway and Invesco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Invesco Municipal
The main advantage of trading using opposite Berkshire Hathaway and Invesco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Invesco Municipal 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 Invesco Municipal will offset losses from the drop in Invesco Municipal'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 |
| Invesco Municipal vs. Invesco Trust For | Invesco Municipal vs. Invesco Quality Municipal | Invesco Municipal vs. Invesco Municipal Opportunity | Invesco Municipal vs. MFS High Income |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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